marginal costing in indian railways

[jaseela123d]

In economics, marginal cost is the change in opportunity cost that arises when the quantity produced increases by one unit, ie it is the cost of producing one unit more than one good. Intuitively, the marginal cost at each production level includes the cost of any additional input required to produce the next unit. At each production level and period considered, marginal costs include all costs that vary with the level of production, while other costs that do not vary with production are considered fixed. For example, the marginal cost of producing an automobile will generally include the labor costs and the parts needed for the additional car and not the factory fixed costs already incurred. In practice, marginal analysis is segregated in short and long term cases, so that in the long run all costs (including fixed costs) become marginal.