Answer:
$ 8 per unit of output
Explanation:
Average fixed cost is defined as fixed cost incurred per unit of output.
Given,
Total Fixed cost = $200,000
Total Variable Cost = $ 150,000
Output level = 25000 units
Average fixed cost can be computed as follows
Average fixed cost = [tex]\frac{Total\ Fixed\ Cost}{No.\ of\ units}[/tex] = [tex]\frac{200000}{25000}[/tex] = $ 8 per unit of output
Fixed costs refer to those costs which do not change in quantum irrespective of the level of output. For example rent of the factory premises.
