Formula – How to calculate average cost Average Cost = Total Cost ÷ Quantity Example A company has a total cost of $400,000 and creates 400 units. Average Cost =
It is calculated by taking the total change in the cost of producing more goods and dividing that by the change in the number of goods produced. The usual variable costs
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Average cost Formula = Total cost of production / Number of units produced = $500,000 / 20,000 = $25 per unit Example #2 If, in the above example, the number of units produced during the year increased to 25,000, then determine the
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