Question

By which quantity would you divide the total cost (TC) in order to calculate a business’s average total cost (ATC)? A. the amount of raw materials purchased for production B. the total of carrying and ordering costs C. the number of units produced D. the number of machines used to produce the total output

Answer 1

The correct answer is (C)

Step-by-step explanation:

The formula to calculate average total cost is (total cost/ the number of units produced). Dividing the total number of goods produced with the total cost will provide us the average cost incurred to produced a specific number of goods.

for example 10 machines were produced with the total cost of $100

$100/10 = $10

The average total cost to produce 10 machines is $10