The average total cost is the expense incurred in the production or deliverance of a service per unit of the output. It is calculated by dividing the total cost by the overall quantity produced. The average variable cost is all the variable cost incurred per unit of the production; it is deliberated by dividing all the variable cost by total output. The average cost is the overall expense incurred in production, while the variable cost is only those costs that vary, the example of these costs is labor.