GIVEN THAT FIXED COST IS N500.00, VARIABLE COST N1,500.00 AND OUTPUT IS 50 UNITS, WHAT WILL BE THE AVERAGE COST OF PRODUCING ONE UNIT

• A. N2,000.00
• B. N60.00
• C. N50.00
• D. N40.00 ✓
• E. N30.00

To calculate the average cost of producing one unit, we can use the formula:

Average Cost = (Fixed Cost + Variable Cost) / Output

Given:

• Fixed Cost = N500.00
• Variable Cost = N1,500.00
• Output = 50 units

Plugging in the values:

Average Cost = (N500.00 + N1,500.00) / 50

Average Cost = N2,000.00 / 50

Average Cost = N40.00

Therefore, the average cost of producing one unit is N40.00.