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At an output of 10,000 units per year, a firm's total variable costs are $50,000 and its average fixed costs are $2. The total costs per year for the firm are.
Production costs vary according to the level of output and seasonal fluctuations that affect output. Many companies use a per unit production cost to set prices and gauge the performance of the factory or production facility. The per unit production cost is essentially a breakdown of all the fixed and variable costs that are encountered in the process of producing a single product.