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How to calculate Average total cost

The Average total cost formula, with plain worked examples you can check yourself.

Average total cost = TC ÷ Q

Worked examples

TC = 2000 · Q = 200Average total cost = 10
TC = 3000 · Q = 250Average total cost = 12
TC = 3000 · Q = 250Average total cost = 12

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Costs & Break-even.

Related terms

Fixed costsVariable costsCost of goods soldOverheadDepreciationDirect costs

Practice Average total cost with real numbers

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