And now we can do the I guess you could say the average cost. Variable vs Fixed Costs in Decision-Making. AVC VC Q In the above formula AVC refers to the average variable cost VC refers to the total variable cost and Q refers to the output.
Costs incurred by businesses consist of fixed and variable costs.
The average variable cost AVC is the total variable cost per unit of output. AVC VC Q In the above formula AVC refers to the average variable cost VC refers to the total variable cost and Q refers to the output. A firms composition of variable costs depends on the time period being considered. Multiply the variable costs for one unit of product by the total number of units produced.