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Advance Mgt Acc.

AJAY PATWARI (ARTICLE) (68 Points)

09 May 2020

Profit is max. when "Marginal Revenue=Marginal Cost".
Can anybody tell me why is it so?

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3 Replies

Sarvani Vani (2 Points)
Replied 09 May 2020

In the case where Marginal (additional) Revenvue is equal to Marginal cost, then the organization can enjoy it's leverage in fixed costs by producing some more units,this will result in profit maximization

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sabyasachi mukherjee (27274 Points)
Replied 11 May 2020

A firm enjoys maximum profit when marginal revenue equals marginal cost..

Though this is not a subject of advance accountancy.
Its core profit maximization in Economics.

The word marginal means additional.
Any increase in additional cost can equalize additional revenue.

Marginal revenue should always be greater than marginal cost.