The average cost is the total cost divided by the number of items.

Formula:

Average Cost = Total Cost / Number of Items

Explanation:

• Total Cost: The total cost of all the items.
• Number of Items: The number of items being averaged.

Example:

“`If a company has a total cost of $10,000 and has 2,000 items, the average cost is:

Average Cost = $10,000 / 2,000 = $5.00“`

Therefore, the average cost is $5.00 for this company.

Additional Notes:

• The average cost can be calculated for any group of items, such as products, services, or expenses.
• The average cost can be used to compare costs between different groups of items.
• The average cost can be used to budget and control costs.