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Cost and Return Analysis

This document discusses cost and return analysis, including definitions of total revenue, average revenue, marginal revenue, total cost, average cost, and marginal cost. Total revenue is the total money received from sales. Average revenue is total revenue divided by units sold. Marginal revenue is the additional income from one more unit of output. Total cost is the sum of total fixed costs and total variable costs. Average cost is total cost divided by output. Marginal cost is the change in total cost from one more unit of output.

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Namdev Upadhyay
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4K views

Cost and Return Analysis

This document discusses cost and return analysis, including definitions of total revenue, average revenue, marginal revenue, total cost, average cost, and marginal cost. Total revenue is the total money received from sales. Average revenue is total revenue divided by units sold. Marginal revenue is the additional income from one more unit of output. Total cost is the sum of total fixed costs and total variable costs. Average cost is total cost divided by output. Marginal cost is the change in total cost from one more unit of output.

Uploaded by

Namdev Upadhyay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Cost and return analysis

A. Return analysis
a. Total revenue (Gross income )
Total Revenue refers to the total amount of money that a firm receives from the sale of its
products.
TR = Y * Py
b. Average revenue
Average revenue is the revenue per unit of the commodity sold. It is calculated by dividing
the total revenue by the number of units sold.
AR = TR / Y
c. Marginal revenue
MR is defined as the additional income obtained from producing one more unit of output. It
is expressed as
MR =

changetotal income
Changetotal physical product

TR
Y

= Py.MPP = Price per unit of output

B. Cost analysis
a. Total cost
It is sum of TFC and TVC.
TC = TFC + Px* X
b. Average cost
It is the total cost per unit of output & is computed by dividing TC by the amount of output at
that particular level of output.
AC =

TC
Y

c. Marginal cost
MC is defined as the additional cost incurred from producing an additional unit of output. It
is expressed as follow
MC =

change total input cost


Changetotal physical product

TC
Y

Px
MPP

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