Business Studies – 4.4.1 Identify and classify costs | e-Consult
4.4.1 Identify and classify costs (1 questions)
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Answer:
Variable Costs = Total Costs - Fixed Costs
Variable Costs = £25,000 - £10,000 = £15,000
Total Variable Costs = £15,000
Average Variable Cost (AVC) = Variable Costs / Quantity
To calculate the AVC, we need the quantity of goods produced. We are not given this in the question. Therefore, we cannot calculate the AVC. However, we can calculate the Average Total Cost (ATC) if we assume a quantity. Let's assume the company produced 3,000 units.
Average Total Cost (ATC) = Total Costs / Quantity
ATC = £25,000 / 3,000 = £8.33 per unit (approximately)
Variable Costs £15,000
Average Variable Cost (AVC) Cannot be calculated without the quantity produced.
Average Total Cost (ATC) £8.33 per unit (assuming 3,000 units produced)