Question

How is the average cost (per unit) calculated?
Multiple choice question.

Dividing total cost by related quantity

Adding total fixed cost and total variable cost

Dividing variable cost by the related quantity

Subtracting total variable cost from total cost

Answer 1

The correct answer is:

**Dividing total cost by related quantity**

This method calculates the average cost per unit by taking the total cost and dividing it by the number of units produced.