What Is the Relationship Between Average Cost and Marginal Cost?

The relationship between marginal cost and average cost means that when the average cost is equal to the marginal cost, the average cost is the lowest. This important property is manifested in that the marginal cost line intersects with the average cost line at the lowest point of the average cost line. As shown below. The application of this property in management accounting is an important method for cost solution optimization. ^[1]