How do you complete question ATC 9-6 in Managerial Accounting? What is the step by step...

How do you complete question ATC 9-6 in Managerial Accounting? What is the step by step solution of this problem?

Expert Solution

While the total cost of production helps firms understand the overall expenses incurred, the average costs help identify the expenditures involved in manufacturing a single unit.

Average Total Cost:

The average Total Cost (ATC) is the sum of the average variable cost and the average fixed costs. That is,

ATC= AFC + AVC

In other words, it is the total cost divided by the number of units produced.

Here,

• AFC= Average Fixed Cost

The average fixed cost is the total fixed cost divided by the number of units produced. Hence, if TFC is total fixed cost and Q is the number of units produced, then

AFC = TFC/Q

• AVC= Average Variable Cost

Average Variable Cost is the total variable cost divided by the number of units produced. Hence, if TVC is the total variable cost and Q is the number of units produced, then

AVC = TVC/Q

Managerial accounting is the practice of identifying, measuring, analyzing, interpreting and communicating financial information to managers for the pursuit of an organization's goals.

ekkarill92 answered 4 months ago

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