When a company produces 5,000 units, total costs equal $150,000 and total variable costs equal $75,000. At this level of output, what is that company average fixed cost?
A) $75,000
B) $30
C) $225,000
D) $15

Question

Quizplus · Accepted Answer

Total fixed costs = Total costs - Total variable costs 
Total fixed costs = $150,000 - $75,000 
Total fixed costs = $75,000

Average fixed cost = Total fixed costs / Quantity 
Average fixed cost = $75,000 / 5,000 
Average fixed cost = $15

When a Company Produces 5,000 Units, Total Costs Equal $150,000