Answer:
Average fixed cost for 20 units = $7
Explanation:
The fixed costs are cost are expenditures that do not vary with the activity level within a given range. Unlike variable costs, fixed costs are tend to be unaffected in the short run by amount of production work done or service rendered.
The units produced will not have an impact on the total fixed costs but rather on the average fixed cost. The average fixed cost would become lower as the units produced increases.
Average fixed cost = Total fixed cost / Total units produced.
Hence , Total fixed cost = Average fixed cost × units produced
DATA
AFC - $14
Units - 10 units
Total fixed cost = 10 × 14 = $140
Average fixed cost for 20 units =Total fixed cost / Number of units
140/20 = $7
Average fixed cost for 20 units = $7
