What do you mean by Average Total Cost ?
Average Total Cost is the combination of total fixed and variable costs, which is divided by the total number of units that are produced by the firm. It is the aggregate of all costs incurred to produce a batch, divided by the number of units produced. The outcome includes a combination of all fixed costs and variable costs incurred to produce the units, and so is considered the most comprehensive costing compilation for a production run. This information is commonly used to set the minimum value at which a price point should be set. Any price set below the average total cost will not allow a business to recover its costs, resulting in losses. It is also useful to track this cost on a trend line, to see how it is changing over time.
How to Calculate Average Total Cost?
Average Total Cost calculator uses Average Total Cost = Total Cost/Quantity of Each Order to calculate the Average Total Cost, Average Total Cost is referred to as the sum total of all production costs divided by the total quantity of output. Average Total Cost is denoted by ATC symbol.
How to calculate Average Total Cost using this online calculator? To use this online calculator for Average Total Cost, enter Total Cost (Tc) & Quantity of Each Order (Q) and hit the calculate button. Here is how the Average Total Cost calculation can be explained with given input values -> 70 = 3500/50.