Question

A business has fixed costs of $45,000 per month and a variable costs of $32,000 per month . What is the average total cost of 7,700 units

Answer 1

Answer:

$10 per unit

Explanation:

The average total cost (AC) is the estimated per-unit cost in a given output.  The formula for calculating the average cost

=(Total fixed costs + total variable costs) / number of units produced = average total cost.

Adding Total fixed cost to total variable cost equal to Total cost (TC)

For this business, the average total costs

=$45,000  + $32,000 /7,700

=$77,000/7700

=$10

AC= $10 per unit