What is the relationship between the total cost concept and average cost concepts? For instance, if you know the total cost and quantity, how do you calculate the average total cost?

Accounting Dec 08, 2020

Expert Solution

The total cost for a firm is given by:

= Total fixed cost + total variable cost

The average total cost is given by:

=Total costQuantity of Production=Total costQuantity of Production

For example, if the total cost is $1000 and the quantity of production is 100 units, the average total cost is given by:

=$1,000100=$1,000100

= $10 per unit

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