This article does not cite any references or sources. Please help improve this article by adding citations to reliable sources. Unverifiable material may be challenged and removed. (March 2008)

The tone or style of this article may not be appropriate for Wikipedia. Specific concerns may be found on the talk page. See Wikipedia's guide to writing better articles for suggestions. (March 2008)

The examples and perspective in this article may not represent a worldwide view of the subject. Please improve this article or discuss the issue on the talk page.

Please help improve this article or section by expanding it. Further information might be found on the talk page. (March 2008)

One can decompose Total Costs as Fixed Costs plus Variable Costs. In the Cost-Volume-Profit Analysis model, Total Costs are linear in volume.

In economics, and cost accounting, total cost (TC) describes the total economic cost of production and is made up of variable costs, which vary according to the quantity of a good produced and include inputs such as labor and raw materials, plus fixed costs, which are independent of the quantity of a good produced and include inputs (capital) that cannot be varied in the short term, such as buildings and machinery. Total cost in economics includes the total opportunity cost of each factor of production in addition to fixed and variable costs.

The rate at which total cost changes as the amount produced changes is called marginal cost; this is the marginal unit variable cost. If one assumes that the unit variable cost is constant, as in cost-volume-profit analysis, then total cost is linear in volume, and given by TC = FC + unit VC * N.

[edit] See also

• Fixed cost
• Variable cost
• Semi variable cost
• Cost-Volume-Profit Analysis
• Cost accounting