Chaple

Produchon funchon and Keluan to o oclo

Hoduchon funchon
Didect aeVaiou belween input and ouiput whese inoease in input
incoease do out þut and uise ve&sa

GbceLok)
Whede9
oc Ouanity of goods oc
F Futhon of (Diaecl aoVaiou)
LLaboua
K Capiia
s Foclos abe cossified os
O Fired facos
Uaiabe soclos
OFised facos
Fixed oclos ade tnose
facoa wkich Cau be chouged in longes þeiod o
ime ony
fixed focod inccubs fred Cost4i4 Cannot be clhauged wih dho chauge
Seue of ou4 pu4
4 Cannoi be zevo at 2eo leuo of boduchion.examb0e Loud Qud teuology
voro bleSoclod
vanable saclo8 Can be chamged in Shod dun as we as Doug &uu.
varia ble Saclos inccuds vavioble Cost, it Can be clhauged wi &o dhauge
leul o þoduclion
A 2ev0 deuo) of poduchon uonioble Cost wi0o aWno be ge
exanpoe Qaboua , Capital Cuwoolaing Cabit) , Row moBeriad elc
* Enoti un poducko unchou ltawe vanoble þobo8kou |Reluan9fodor
Shol dun þuoduchon mchion desea lo a ime þeiod whexe a poducer
Conno chauged his &xed oclo he Can ouly change dko vaiabe aclos
to chauge dto Oeuo)
of buoduchon |oulpud

hol un þodudhon sunchon dPjea Lo change in vanable hausð ovex &o

iredockox to ohange o leuo0 of oulpu
 ReLIANCe
General Insurance

Long Run puoducliou sunchon RetubntoS«Se

do Sador Can be daouged
Long Run is a ime porod wheae a00
o Oouo of oulpuB

buob08h0 Relum 4ofcckox

Hoggs of Sho8t dun þoduclioy | ovavobVe
* Low

Thebe ode dhaee stogen of Low of vonabVe of paboshion

O Law of incaeasing deBubM
&etuan
Law of diminisking
Low oUegoiue seBudn

OLow o Sncopasiug aekuon (whem MP)

oues dto
Law of incoeGsiug detuan defes 4o change in vanable Soco
xed faco8 due 4o whidh Oulbu+ dini niswug seludh
Changen a4 tncaeaSing dole known as Law 0f
mP)
Low of diministinq xetuanlunen in vaniable fotlo
to change
Law o diminisi ng deludn delees
wich due to oulpu4 intoeases o4 diminwsLuug
oves dto&ied Sackod
lwnen MP)
LOw o Uegokue ze4udn Ouer to
Law of Negahve dekubn ejes o chauge in voiable Satlo
ixed Saclo due lo which oud put cdhangen at negakive ale lkuown

OS Low Oneqavive deludn

RDAI Reaistration No. 103 | Reliance General Insurance CompanyLImited Registered Office: 19, Reliance Centre. Walchand
Hirachand Marg, Ballard
Mumbai 400001jCorporate Office: Reliance Centre, 4th Floor.SouthWing,NearPrabhatColony Santacruz (East), Mumbai 400 055 Corporate dentity
U66603MH2000PLC128300 Trade Logo displayed above belongs to Ani DnirudnalAmbani Ventures Private Limited and used by Reliance General in
RGI/MCOM/AGENCY/LETTERHEADVer. 1.1/16.02.16
Company Limited under License |
 Di6Soeu beBuween &ho84 dun amd Ooug aun podudiou uncio

Shogl zun Podudion fundhion Long &un Poduchiou_duuchou

00finakon Definanon
wnen uoviob0e socloa aàe added Loug dun þoduchiou 2efes chauge
ou o

ed Satlos to change do Ooue) o vGiable oà

in 00 o facoa ein0
output nown as Shool àun poduckioy red 4o diange d«o Ooucdof out put
guncion
I n &6h0t bun on0y one faclor Co n Uowg &un mode dhon oue oclor
Chomge do 0eued afou4put wi 00 be dho nge 40 dhange do Douo)
OuHput
n Sho8t dun chonge input in
n Dong dun we houe to dhouge
wi00 not aDuwayn olnange to
ouput Scose +o change ko O41 put
U ShodB dun is lenown as Retudn
Long &un is lnouwh 0S e4ue lo
4o Scde
ScSe

Tota oduct (TP), mp cmadgina) Poduct) and AP CAUeda9e Poduci9)

.Toia Poduct
Toto9 bodutt aefed o Sum 40
900d and Seduices þuoduces by a
boduces in an Accounhng yead.
TO4 puoduet EmP

Moagina poduct
mobgina poduet efed to incaease
in 4ot buoduct due to oddiiou
in variabde Saclos in an
accOunhng yead

MP:T- 1 h-1

Average þoduc?
Hueage Sockor oefox +0 0ul bud pes unit uaiable sacoo
AP-p-ToHa puaducG

L Vanable fatko
 RELIANce
General Insurance

Scheduve of TP,AP and MP

LobousC) Poduct CfP)
aueboge MaaginaD P.odue1
Aoducl AP)
mp)
SO S0:1 S0 TP1Po : S0-0 5o
2 90 uS
20
30
3S 0
5 ISO
30
ISO

AP T P
L

* Shool dun boducion funchion Law of uoiable þobosiou Retud looclod.

chonge in uouiable Sodod oued dto fred oclox tochaugedo
Oue of oul þu4
Soheduveo Law ofvoiobe peopoaliou
unit o Uni O maogina poduct
Land Labou Poduc
1 2 21 Icoeasin9 mp
2 5 3 Seaeosing aeluh
3 4 >diministing mP
9
2 3 diminisin9
2 Retuan

S 1
0uegakioe mp

8 -1 Jegakive boluen
1

IRDAI Registration No. 103 | Reliance General Insurance

Company Limited. Registered Office: 19, Reliance Centre, Walchand Hirachand Marg, Ballas
Mumbai 400001 | Corporate Office: Reliance Centre, 4th Floor,
Soutn
U66603MH2000PLC128300 | Trade Logo displayed above belongs toing, Near Prabhat colony, Santacruz (East), Mumbai 400 055. Corporate ldenti
-

Company Limited underLicense | RGIMCOMIAGENCYLETTERHEADVer.Dnirubnai

Anil 1.1/16.02.16
Amdani ventures Private Limited and used by Reliance General
taobh o Incocasiug9,dimiw'sliug aeluon 0d negohue &elu0

Poinl o -Oeiou

TPudue

Poduck
Stoge1 Sioge2 ioge 3

Inceoniug Diminis n9
detudn
Aegohue
S4a9e S4a9e 2 SIage3

of uaio,le factbo lobou 8)

unit

Louses o Incoeasing dekudn o docdb

0 Fu0Des uilisaion o{ anouaces
USe macliney and oau malena) wih fu0Des uiDisahou of desouaces.
Divison o Laboua A intaease in esfienty
Csiving noni woad nghi þeesou
BeHes Coeainaiou between solos
uoo Cooeinaion bolucen o ed and vanable sotoa Vead o intocose
in margic Poduct mp) and 04«0
puodued a4 Mo incoeasing dte
Cousen o diministing oluu lo a satbs
Fsty o O Sacor
ouonab Oe sacos (ornbined sik fred fadloy oud gets excessiuel
unlined 9A S«Me8 gotated wead aud Head qnd Oossos i4n olfhiuouty
mperoc acos &ubshtuabty
need of Capitc heis ad tmey in taCase Wo Oaloous ayd uice-ves
Poos Codinaiou betweeu as Socos
e face& inoeGsei ouly qud uquable Jaclod demaiu lonsla
eadn ohoe Cordinahon betuweeu Uo laclsr
 ReLIANce
General Insurance

AsSumphion o8 &o Couw 0 voiabDe þobovhon

Cau be chauged
Raio in which Socoa of poduckon aoe Conbined
999 vaiabe sacto8 must be homogenouS
S4ote techology demoin Coustas
Postpome e koLaw
Owhen 4echodo9y used in 0puucess of puoduchoy
dhede is împuouemes in
tO Ared acl08 aDe distoveded So
c s Ho
when Some Subshiule of
Consisoints of fiviy of Sacos is vemoved

Sohes o P,mP,AP and dhei debhonsip

0 UniOo MP wi00 in&eose fPwi09 adno.decoeas e

Me P
die
when MP &tadB dimiwgling P wi00 intooase ai diminiçing
MP is 0 u wi90 be maximum
when
MP TUA

when mP is neqanue P wi90 Stasl diminn'cLiug

Rebanowslip belween P and MP

when mP incoease aP incaease al an incaeasing dafe
when mP decaeose , TP incoease a4 diminis ing dde
when mP0 TP is maximum
wwen Mmpis negahue, o deDinen
Redaio s-b betweey APand Me
O iAueeage buoduct incoeasen MP>AP
Aue age þoduct detaease1, MP <AP
Aueuge podutt is at itS maximum AP M

IRDAI Registration No. 103 | Reliance General Insurance

Company Limited. Registered Office: 19, Reliance Centre, Walchand Hirachand Marg, Ballarda
Mumbai 400001 Corporate Office: Reliance Centre, 4th Floor, Soun
wing, Nearra0natcolony, santacruz (East), Mumbai 400 055. Corporate identity N
U66603MH2000PLC128300
-

Trade Logo displayed above belongs to Ani DnirupnaAm0ani ventures Private Limited and used by Reliance
Company Limited under License | RG/MCOMIAGENCY/LETTERHEAD/Ver. 1.1/16.02.16 General ins.
 Choplea8 Concepl of Cost
Conceptof Cost
Cost aefe8 40 404al expendituse done by a podutes on ocmos as we09 as non
Soclos Sebuices sos dto þuaspese of puodu uiug outpu

Type ofCos
0&cpiest Cos+ Imowey 10He8 cos+
Expies Cost ase dose ost goa which o poduced nas o pay ii is eJso
Known as mouey Cos4 0d outes Cost
examp0e expendiotuoe on Row moloual
ToaveWin9 extpense efc
ImpOicit Cost
ImbOicH Cost 8efe8 &Ose cos4 which an enioe
paemue& intcuos his ou
ocLo& o þoduchou in hi's businem oa which he doen noi 90+ a9
ewasd exccept pos't and Ooss.
ToicS Cost Gcblici+ +Implidt
Se0Oiug Cos4 and puoduchou ost
Se00ing Cost dglod 4o dua Cost which is incuoeed by ho huoduce&o
bvomo ting his Sele
Poducln on Cost ade duose Cost whic intuer fos do hoduciou o90ods
and Seeuicen i4 inrhude explist and Imjou
.

Shoxt Run Cost

Snoat dun is a hme penod whee Some of o focloa aae lired wic
incubs sed Cost amd Sorme abe vonable wnich incube vavable Cost

vonabe Cost
ired Cost
Fixed Cos vanable Cost wi90 becorne 2eo
ade incuo8 on
Hed Saco8
04 20%0 Oeuo9boduchion
4 wi00 change wim to change
Fired Cost beco me Z0vo
neues
in Oeue o poduchon
eiMer þoduthon, beLome 3e
tnee dhange wim Uanabe Cost goaph wi be
change in þuoducion upuwadd s0opiu9
Fixed Cost geaph
betome par00o) Lo y-Gu's exornbe: eupendiotube oRaw melevd
exanp0e: Rent exenditu be on cdoctidly
 RELIANCe
General Insurance

Schedde of fred (ost

Tota Aixed (ost
unit o ou put
0
0
0

0
0

i o t DGired Cost

10 Pab0oDlo X-aa's)

2
2 3 s
(ou4put)

Schedule_o( vOioble Cos+

Uni of out þut ot vona ble Cos+

2 8
3 24
28
5 32

upuwa soprin

(Tuc)
Tvc
30
20
10

2 3 S
IRDAI Registration No. 103 Reliance General Insurance Company Limited. Registere Office: 19, Reliance Centre, Walchand Hirachand Marg, Ballard Estat
Mumbai 400001| Corporate Office: Reliance Centre, 4th Floor, South Wing, Near Prabhat Colony, Santacruz (East), Mumbai- 400 055. Corporate ldentity Numb
U66603MH2000PLC128300 Trade Logo displayed above belongs to Anil Dhirubhai Ambani Ventures Private Limited and used by Reliance General lnsuran
Company Limited under License | RGIMCOMAGENCY/ILETTERHEADVer. 1.1/16.02.16
Aveeage Cost (Fxd) (AFC)
Aucage Cost is Cosi pe umit ofoutput

AC Tc
6ouipu
Ouesiou
T 2 1000o0

AC TC 2
10009 000 Uiis
Schedule os Aueaoge Cos
OuHput ToHa) Cost |Aueaoge cos+

(
20
2 28
3 34 3
38 9S
u2 84

Cost
ttophical peenentaion o Aueao9e
20

18 Rectangulhbz

6 Mybeabola

2
Aveoage 0
Cos+

2
2 3
OuH put)
 ReLIANCe
General Insurance
Auexoge variabde Cos CAUC)
Reses +0 peaunit vanable
Cost
AUC uC
9/0ulput

Schedue AuC
UC AUCa uC
OuHpu+

8
64
32

AvC
(UShaped)
8
AUC
Gtoaph is woyn u Shee
5

4S
ouUAput)
Maagina Cost
Incaeose in 4oi Cost due lo on addiiou buoduciou of Commodky

mc1n- ,

IRDAI Registration No. 103 Reliance General Insurance Company Limíted.Registered Office: 19, Reliance Centre, Walchand Hirachand Marg. Balkard Esta
Mumbai 400001 Corporate Office: Reliance Centre, 4th Floor, South Wing, Near Prabhat Colony, Santacruz (East), Mumbai 400 055. Corporate ktentihy Numt
U66603MH2000PLC 128300 Trade Logo displayed above belongs to Anil Dhirubhai Ambani Ventures Private Limited and used by Relianoe General insua
Company LimitedunderLicense| RGIMCOMI/AGENCYLETTERHEADVer. 1.1/16.02.16
SchedSe gf moaginal Cos4
OuiputTEC uC
0 20 0
0 8 28
2 24 34
3 28 38
32 42
0 38 48

Maaginal os+
10
(ushabed)

3
2

3 5
2
Cout pu4)

Kelahiou belween Auebage, Maogiu oi os

8 Tokd Cost.
&chedule of Auesoge (ost,magina Cos
Ou4 put 1To40 Aueaag e maagiuc
Cos+ CoS+ COs4
10

20 0 0
28 8
34 13
38 9:5
84
6
8
 ReLIANCce
General Insurance
RelohonShip between ACand mc dyay Mc
cost is 0iug Ac is gocoted
Auebage
ACMC
is nsiug Ac is Smal0eg dhau MC
iAueage (ost

MCAc
Aucaage Cos is Consla
AC aud Mc bo ad e e9uay
Ac MC
RolanionSip between Tcand mc
ony when mc
dale is incaea siug
TC incaease at an intoeasin9
inceease a4 a ConsHa dafe wnen mc is ous4a.
Tc incaa se al a dimiwsiug &oBe when mc is decoeagiuq

Betaune mc is deibrote) of meP

F:OOing mc looaosp0nds W nsing MP,a SiHuahou Of incoeare deluan ko

asatLos lo
me Cobdenpouds ko s0ing mP, a Situaio4 Qf diminwsuu9 xe4udy
Ksing
a Sacloz

IRDAI Registration No. 103 Reliance General

Insurance
Mumbai 400001 Corporate Office: Reliance Centre, 4th Company Limited. Registered Office: 19, Reliance Centre, Walchand Hirachand
Floor, South Marg, BallardE
U66603MH2000PLC128300 Trade Logo displayed above belongs toWing, Anil
Near Prabhat
Colony, Santacruz (East), Mumbai -400 055. Corporate
Dhirubhai Ambani Ventures Private Limited and ldentity N
Company Limited under License RGI/MCOMIAGENCY/LETTERHEADVer. 1.1/16.02.16 used by Reliance General insu