Question

Just before the firm discussed in Problem $22-4$ produced its last tablet device in the previous month, its total costs were $\$12,425$, What was the marginal cost incurred by the firm in producing the final tablet device that month?

Short answer

The firm's cost of manufacturing a last device product for such a period is $\$75.$

Step-by-step solution

Introduction

Marginal cost refers to the rise or decrease within the cost of manufacturing yet another unit or serving one more customer. it's also referred to as price. Marginal costs are supported production expenses that are variable or direct – labor, materials, and equipment, as an example – and not fixed costs the corporate will have whether it increases production or not. Fixed costs might include administrative overhead and marketing efforts – expenses that are the identical regardless of what number pieces are produced.

Explanation

In the parliamentary procedure, the typical variable cost of manufacturing $250$units of the tablet is given as $\$40$ and also the average charge is$\$10$.
Therefore, the overall cost of manufacturing the$250$ units of tablets is calculated below:
$T{C}_{250}=(250\times \mathrm{\$}40)+(250\times \mathrm{\$}10)$

$=\$10,000+\$2,500$

$=\$12,500$

Thus, the full cost of manufacturing $250$ tablets is $\$12,500$.

Substitution

Now, the firm estimates that it incurs a complete cost of $\$12,425$ before producing the last unit. this suggests that the entire cost of manufacturing $249$tablets is$\$12,425$.
To determine the differential cost of manufacturing the ultimate tablet, usethe subsequent formula:
$\text{Marginal Cost}=\frac{\text{Change in Total Cost}}{\text{Change in Total Output}}$

$=\frac{\mathrm{\$}12,500-\mathrm{\$}12,425}{250-249}$

$=\$75$

Hence, the cost incurred by the firm in producing the ultimate tablet device that month is$\$75.$