Enter the total cost and the total number of units into the calculator. The calculator will evaluate and display the average fixed cost of the good.
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Fixed Cost Formula
The following equation can be used to calculate the average fixed cost of a service or good.
FC = TC / U
- Where FC is the fixed cost
- TC is the total cost
- U is the total units sold
Fixed Cost Definition
A fixed cost is a measure of the average fixed cost per unit of a service or product.
Fixed Cost Example
How to calculate the fixed cost?
The following example problem outlines the three steps required to calculate the fixed cost per unit of a product. In general, fixed costs can also be applied to services, but for this example, we will focus on a physical product that is being manufactured.
The first step in determining the fixed cost is to set a total time period to analyze the total cost and units produced. For this example, one month of time is sufficient.
Next, determine the total number of units produced during that time. In this case, the total number of units is 500 over the month.
Next, determine the total cost to produce those units, i.e. total costs in the same month associated with those units. In this case, the total cost was $20,000.00.
Finally, calculate the fixed cost per unit using the formula above:
FC = TC / U
FC = $20,000 / 500
FC = $40 / unit of fixed cost
A fixed cost is typically considered the average cost per unit of production or some manufactured or produced good.