I'MaPizzaCo. produces and sells specialty pizzas. Last year, it produced 8,000 mushroom, sausage and spinach pizzas and sold each one for $8. To produce these 8,000 specialty pizzas, the company incurred variable costs of $24,000 and a total cost of $40,000. I'MaPizzaCo's average fixed cost to produce 8,000 specialty pizzas was

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The total cost is $40,000, and the variable cost is $24,000. The fixed cost is $40,000 - $24,000 = $16,000. The average fixed cost per pizza is $16,000 / 8,000 = $2.00.