Incremental Cost

Loading the player...

What is 'Incremental Cost'

Incremental cost is the encompassing change that a company experiences within its balance sheet due to one additional unit of production.

Also referred to as "marginal cost".

BREAKING DOWN 'Incremental Cost'

Incremental cost is the overall change that a company experiences by producing one additional unit of good.

RELATED TERMS
  1. Incremental Cost Of Capital

    A term used in capital budgeting, the incremental cost of capital ...
  2. Long Run Incremental Cost - LRIC

    Forward-looking incremental costs that can be accounted for by ...
  3. Incremental Analysis

    A decision-making technique used in business to determine the ...
  4. Incremental Tax

    A tax that increases in increments based on income levels. Incremental ...
  5. Incremental Cash Flow

    The additional operating cash flow that an organization receives ...
  6. Marginal Cost Of Funds

    The incremental cost of borrowing more money to fund additional ...
Related Articles
  1. Term

    What is Incremental Cost?

    Incremental cost is the added cost of manufacturing one more unit.
  2. Economics

    Understanding Incremental Cash Flow

    Incremental cash flow is the additional operating cash flow an organization expects to generate from a new project.
  3. Economics

    Understanding Marginal Cost of Production

    Marginal cost of production is an economics term that refers to the change in production costs resulting from producing one more unit.
  4. Economics

    Understanding Marginal Analysis

    Marginal analysis is the process of comparing a one-unit incremental cost increase of an activity with a corresponding increase in benefits.
  5. Economics

    Understanding Cost of Revenue

    The cost of revenue is the total costs a business incurs to manufacture and deliver a product or service.
  6. Investing

    Outstanding Shares

    Learn more about this important number found on a company's balance sheet.
  7. Investing

    Retained Earnings

    Learn more about this calculation and why companies include it on the balance sheet.
  8. Economics

    What Are The Different Types Of Costs In Cost Accounting?

    Cost accounting measures several different types of costs associated with a company’s production processes.
  9. Economics

    Understanding Historical Cost

    Historical cost equals the original purchase price of an asset recorded on a company’s balance sheet.
  10. Fundamental Analysis

    The Gross Margin

    A business's "gross margin" is a rough gauge of how profitable its operations are. It measures how much sales revenue the company retains after all of the direct costs associated with making ...
RELATED FAQS
  1. Do production costs include the marginal cost of production?

    Learn more about marginal costs of production and production costs. Find out how businesses can use marginal cost calculations ... Read Answer >>
  2. How is the marginal cost of production used to find an optimum production level?

    Understand more about production cost calculations, and specifically how the marginal cost of production is used to determine ... Read Answer >>
  3. How do fixed and variable costs each affect the marginal cost of production?

    Learn about the marginal cost of production, how to calculate the marginal cost, and how fixed costs and variable costs affect ... Read Answer >>
  4. How is marginal revenue related to the marginal cost of production?

    Learn about the marginal cost of production and marginal revenue and how the two measures are related when determining the ... Read Answer >>
  5. Are marginal costs fixed or variable costs?

    Understand how to identify marginal costs as a function of fixed and variable costs. This article addresses how marginal ... Read Answer >>
  6. How do fixed assets become impaired?

    Find out how an investor can use the procedure of marginal analysis to make investment decisions by comparing marginal costs ... Read Answer >>
Hot Definitions
  1. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  2. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  3. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  4. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  5. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
Trading Center