COST OF PRODUCTION SCHEDULE
All the different concepts discussed in Unit 23.3 of this chapter are interrelated in a number of ways. They can easily be computed or calculated mathematically with the aid of their various formulae.
The cost concepts are better interpreted and understood when they are arranged in a schedule called the cost of production schedule as in Table below
Any missing figure(s) can be calculated or filled up using other cost values and their respective formulae.
| Unit of Output (IQ) N | Total Fixed Cost (TFC) N | Total Variable Cost (TVC) N | Total Cost Cost (TC) N | Average Total Cost (ATC) N | Average Variable Cost (AVC) N | Average Fixed Cost (AFC) N | Marginal Cost (MC) N |
| 1 2 3 4 5 6 7 | 20 20 20 20 20 20 20 | 12 13 16 18 20 22 24 | 32 34 36 38 40 42 44 | 32 17 12 9.5 8 7 6.3 | 12 7 5.3 4.5 4 3.6 3.4 | 20 10 6.6 5 4 3.3 2.8 | – 2 2 2 4 2 2 |
MATHEMATICAL APPROACH TO COSTS
As stated earlier, some of the figures in Table 23.1 may be missing and you are required to fill them up.
You can only do this by applying the various cost concept formulae to solve them.
Example 1
Complete the following cost schedules and answer the questions that follow.
| Output Q | Total Cost (TC) | Average Cost (AC) | Marginal Cost (MC) |
| 1 2 3 4 5 6 | 18 14 ? 20 ? 48 | 8 ? 6 ? 6 ? | – ? ? ? ? ? |
- At what output is AC at the minimum?
- At what output is MC at the minimum?
- At what output does AC start increasing?
- At what output does MC start to be greater than AC?
- What is the maximum output? (SSCE)
Solution
| Output Q | Total Cost (TC) | Average Cost (AC) | Marginal Cost (MC) |
| 1 2 3 4 5 6 | 18 14 a 20 b 48 | 8 c 6 d 6 e | – f g h i j |
TC = AC x ouput
a = output 3
TC = AC x output = 6 x 3
TC = 18
b = TC = 6 x 5
TC = 30
TC = 14
c = AC = output 12 = 7
d = AC 20 = 5
4
f = MC at output 2
TC 2 – TC = 14 – 18 = 6
g = MC at output 3 = 18 – 14 = 4
h = MC at output 4 = 20 – 18 = 2
i = MC at output 5 = 30 – 20 = 10
j = MC at output 6 = 48 – 30 = 18
- loans for businesses
- how to establish enterprises
- what is a firm
- price equilibrium
- scale of preference
- concept of economics
- economic tools for nation building
- budgeting
- factors affecting the expansion of industries
- mineral resources and the mining industries
60. DISEASES AND PESTS OF CROPS
61. MAIZE SMUT
62. RICE BLAST
63. MAIZE RUST
64. LEAF SPOT OF GROUNDNUT
65. COW-PEA MOSAIC
66. COCOA BLACK POD DISEASE
