![]() (Average fixed cost + Average variable cost) x Number of units = Total cost Example of the Total Cost FormulaĪ company is incurring $10,000 of fixed costs to produce 1,000 units (for an average fixed cost per unit of $10), and its variable cost per unit is $3. ![]() The formula is the average fixed cost per unit plus the average variable cost per unit, multiplied by the number of units. ![]() This information can be useful for evaluating the total cost of a product or product line. The total cost formula is used to derive the combined variable and fixed costs of a batch of goods or services.
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