Business – 5.4 Costs – Cost information | e-Consult
5.4 Costs – Cost information (1 questions)
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| Output (units) | Fixed Cost ($) | Variable Cost per Unit ($) | Total Variable Cost ($) | Total Cost ($) | Average Cost per Unit ($) |
| 10,000 | 150,000 | 12 | 120,000 | 270,000 | 27.00 |
| 15,000 | 150,000 | 12 | 180,000 | 330,000 | 22.00 |
When output rises from 10,000 to 15,000 units, the fixed cost is spread over more units, reducing the average fixed cost per unit. Because the variable cost per unit remains constant, the overall average cost per unit falls from \$27.00 to \$22.00, illustrating economies of scale.