To calculate ATC we can follow a three-step process. With the increase in the production of the company the AFC of the company falls and the curve of the AFC will slope. For example average total cost of producing 5 units is 505 6 10 6 16.
Of Units Produced Fixed Cost 100000 375 20000 Fixed Cost 25000.
To calculate the average fixed cost of a product follow these steps. Next determine the total units. Average fixed cost AFC equals total fixed cost FC divided by output Q. The formula used for determining cost of goods sold is.