Enter the total cost and the total number of units sold into the calculator below. The calculator will evaluate and display the average cost per unit sold.

Average Cost Formula

The following equation can be used to calculate the average cost of a good. 

AC = TC / TU
  • Where AC is the average cost
  • TC is the total cost
  • TU is the total units sold

To calculate average cost, simply divide the total cost by the total number of units sold.

Average Cost Definition

An average cost is exactly as it sounds. It’s the average cost to produce 1 unit of goods given the total cost and total units produced. Since costs can vary from unit to unit, taking the average cost can be helpful in financial situations.

Average Cost Example

How to calculate average cost?

  1. First, determine the total cost.

    Measure the total cost of the units sold.

  2. Next, determine the total units sold.

    Determine the total quantity of units sold.

  3. Finally, calculate the average cost.

    Calculate the average cost of units sold using the formula above.

FAQ

What is an average cost?

An average cost is an average amount of cost per unit of a certain quantity of sold goods.