Average cost
In
economics, average cost is equal to total cost divided by the number of goods produced (Quantity-Q). It is also equal to the sum of average variable costs (total
variable costs divided by Q) plus average fixed costs (total
fixed costs divided by Q). Average costs may be dependent on the time period considered (increasing production may be expensive or impossible in the short term, for example). Average costs affect the
supply curve and are a fundamental component of
supply and demand.
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Average costing
Under the average-cost method, it is assumed that the cost of inventory is based on the average cost of the goods available for sale during the period. Average cost is computed by dividing the total cost of goods available for sale by the total units available for sale. This gives a weighted-average unit cost that is applied to the units in the ending inventory.
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Average Total Cost
a measure of cost control, calculated by dividing the total cost of the goods produced by the number of units sold.
Average total cost
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