When the Frame Factory is producing 1,500 frames, total cost is $225,000 and variable cost is $180,000. What is average fixed cost at 1,500 units?

Question

Quizplus · Accepted Answer

Average fixed cost is calculated by subtracting total variable costs from total costs and then dividing by the number of units. Here, $225,000 - $180,000 = $45,000 in fixed costs. Dividing $45,000 by 1,500 units gives an average fixed cost of $30 per unit.

When the Frame Factory Is Producing 1,500 Frames, Total Cost