The Cost Concept Of Tvc Total Variable Cost

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the cost concept of TVC total variable cost shows a company the total cost of all the variables with in the company; variables such as materials, production labor and others. The total variable cost depends on the quantity the more the company produces the greater the total variable cost will be. This information is important to a company because if the price of production be greater that the price set the company might decide to produce noting avoiding variable cost The cost concept TFC total fixed cost would provide a company with information related to total cost of all fixed cost in the company such as rent, utilities, and salaries. Total fix cost is not impacted by other cost concepts during the short run because it is the total of all variables that are fixed and can not be changed, the cost of fixed variable cannot be avoided unlike TVC because even if there is no output fixed cost must be paid. The cost concept AVC shows a company the average per unit cost including both variable cast and fixed cost. This information is use to determine the price a company should sell the product for to make a profit. AVC is determined by the total variable cost and the quantity if the price is higher than the AVC then the company is making a profit if price is lower the company may close down because the cost of producing 1 unit is much higher the the price for that 1 unit The cost concept AFC Avrage fix cost provaids a company with information about the total fixed cost per unit

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