Enter the change in variable costs ($) and the change in quantity produced into the Incremental Cost Calculator. The calculator will evaluate and display the Incremental Cost. 

Incremental Cost Formula

The following formula is used to calculate the Incremental Cost. 

IC = dVC / dQ
  • Where IC is the Incremental Cost ($/unit)
  • dVC is the change in variable costs ($) 
  • dQ is the change in quantity produced 

To calculate incremental cost, divide the change in variable costs by the change in quantity produced.

How to Calculate Incremental Cost?

The following example problems outline how to calculate Incremental Cost.

Example Problem #1:

  1. First, determine the change in variable costs ($). The change in variable costs ($) is given as 130.
  2. Next, determine the change in quantity produced. The change in quantity produced is provided as 30.
  3. Finally, calculate the Incremental Cost using the equation above: 

IC = dVC / dQ

The values given above are inserted into the equation below:

IC = 130 / 30 = 4.33 ($/unit)

Example Problem #2: 

The variables needed for this problem are provided below:

change in variable costs ($) = 200

change in quantity produced = 50

Entering these values and solving gives:

IC = 200 / 50 = 4 ($/unit)