About Cost Equation A cost equation is a mathematical formula that a company can use to predict the expenses associated with the production and sale of a certain amount of goods.

Marginal cost typically follows a U-shaped curve, initially decreasing due to economies of scale but eventually rising as production facilities reach capacity and face diminishing returns.

Formula for Calculating Prime Costs Though the production of goods and services involves many different kinds of expenses, the prime cost formula only takes into account those variable expenses ...