Average Fixed Cost (AFC) Calculator

Rs
units
Finance

The Average Fixed Cost Calculator shows how much of your fixed cost is spread over each unit you produce. Enter your total fixed costs (rent, salaries, insurance — costs that don't change with output) and the number of units, and you get the fixed cost per unit. Because total fixed cost stays the same, AFC falls as you produce more, which is the heart of economies of scale.

Formula

Average Fixed Cost = Total Fixed Cost ÷ Quantity Produced
  • Average fixed cost (AFC) is the fixed cost attributable to each unit of output.
  • Formula: Average Fixed Cost = Total Fixed Cost ÷ Quantity Produced.
  • Fixed costs do not change with the level of output — examples are rent, insurance, equipment leases, and salaried staff.
  • Input definitions: • Total fixed cost: the sum of all costs that stay constant regardless of how much you produce. • Quantity produced: the number of units made or sold over the same period.
  • Because the numerator is constant, AFC always decreases as quantity rises — this is the “spreading” of overhead.
  • AFC plus average variable cost (AVC) equals average total cost (ATC) per unit.
  • Use AFC to understand how much higher volume can lower your per-unit overhead burden.

Example Calculation

Inputs
  • Total fixed cost: 50000 Rs
  • Quantity produced (units): 1000 units

With total fixed costs of Rs 50,000 and 1,000 units produced, AFC = 50,000 ÷ 1,000 = Rs 50 per unit. If output doubles to 2,000 units, AFC falls to Rs 25 per unit even though total fixed cost is unchanged — that is the spreading effect.

Frequently asked questions

What is average fixed cost?
Average fixed cost is your total fixed cost divided by the number of units produced. It tells you how much fixed overhead each unit carries.
Why does AFC fall as output increases?
Total fixed cost stays the same no matter how much you produce, so dividing it by a larger number of units gives a smaller cost per unit.
What are examples of fixed costs?
Rent, insurance, equipment leases, depreciation, and salaried (non-hourly) wages are common fixed costs because they don't vary with output.
How is AFC different from AVC?
AFC covers costs that stay constant; average variable cost (AVC) covers costs that change with output, such as raw materials. Together they make up average total cost.
Can average fixed cost ever increase?
Only if output falls (fewer units to spread the cost over) or if total fixed costs rise, for example after a rent increase.
How do I use AFC in pricing?
Add AFC and AVC to find the average total cost per unit, then set a price above that to cover all costs and earn a margin.