Sometimes it's helpful to think about per-unit costs rather than total costs. To convert a total cost into an average or per-unit cost, we can simply divide the relevant total cost by the quantity of output being produced. Therefore,
- Average Total Cost, sometimes referred to as Average Cost, is Total Cost divided by quantity
- Average Fixed Cost is Total Fixed Cost divided by quantity
- Average Variable Cost is Total Variable Cost divided by quantity
As with total cost, average cost is equal to the sum of average fixed cost and average variable cost.