Identify two ways to compute average total cost (ATC).

Question:

Identify two ways to compute average total cost (ATC).

Average Total Cost:

The average total cost (ATC) refers to the estimated cost of one unit of production. ATC is not normally the same throughout the production level. It changes with the change in the total number of units produced. This is because some costs are affected by changes in production level while some costs do not.

Answer and Explanation: 1

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First Method:

First, determine the total variable cost (TVC) and the total fixed cost (TFC). We can identify the total variable cost when the item...

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Average Total Cost: Definition & Formula

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Chapter 3 / Lesson 23
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Learn what is the average total cost. Learn its use, its formula, and how to apply it.


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