Q:

What is marginal resource cost?

A:

Quick Answer

Harper College's economics department defines marginal resource cost as the added cost created in manufacturing a product by employing an additional resource unit. Generally, the added resource unit is another worker.

 Know More

Full Answer

The Oswego State University of New York further defines the marginal resource cost by linking it to the marginal revenue product, which is the additional revenue obtained by adding an additional resource. Companies use the marginal revenue product and the marginal resource cost to determine if new workers should be hired. If the additional revenue is higher than the cost, then the additional resource unit is considered profitable. To improve profits from a product, a resource unit may be removed if the marginal resource cost is higher than the marginal revenue product for that unit.

Learn more about Financial Calculations

Related Questions

  • Q:

    What is the SWOT analysis of Meezan Bank?

    A:

    The SWOT analysis of Meezan Bank is a crucial resource for the company’s management, executives, shareholders and anyone looking to gain a better understanding about the company’s current business progress. SWOT, an acronym for Strengths, Weaknesses, Opportunities, and Threats, is an in-depth strategic analysis of a company's businesses and operations that has been compiled to provide a clear and an unbiased view of the company's key strengths and weaknesses and the potential opportunities and threats.

    Full Answer >
  • Q:

    How is a gross profit ratio equation calculated?

    A:

    The gross profit ratio is calculated by dividing a firm’s gross profit figure by its net sales (revenue minus the cost of goods sold). The equation is a standard financial metric used to assess a company’s financial health and stability.

    Full Answer >
  • Q:

    How do you calculate depreciation expense?

    A:

    Depreciation expenses are calculated by dividing the cost of an asset by the number of years a company expects to own it, explains CPA Mike Piper for The Oblivious Investor. Straight-line depreciation calculates the deprecation of assets until the end of their life expectancies; salvage value calculates depreciation until the year of sale.

    Full Answer >
  • Q:

    How do you calculate a capitalization rate?

    A:

    To find the capitalization rate, or cap rate, use the formula of capitalization rate equals annual net operating income over cost or value. The capitalization method is a different way of performing basic calculations in order to find the rate of interest that is used to calculate the current value of a property or value that will bring in income eventually.

    Full Answer >

Explore