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Average Cost Calculator

LAST UPDATE: September 24th, 2020

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Definition – What is average cost?

Average cost is the average cost per unit produced. It is a measurement of how much each item costs to produce.

Formula – How to calculate average cost

Average Cost = Total Cost / Quantity

Example

A company has a total cost of $400,000 and creates 400 units.

Average Cost = $400,000 / 400 = $1,000

Therefore, the average cost is $1,000 per unit.

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