How this calculator works
Fixed costs do not change when output changes within a period: rent, salaried supervision, insurance and depreciation are typical examples. Average fixed cost divides that total by the number of units made, so it falls as output rises. The comparison volume shows the same fixed bill spread over a different number of units. That fall is the arithmetic behind economies of scale, and it is why spreading overhead over more units lowers unit cost even when the fixed bill itself is unchanged.
Formula
Average fixed cost = total fixed cost / units produced. The same total is divided by the comparison quantity for the second result.
Worked example
Fixed costs of $5,000 over 1,000 units give an average fixed cost of $5.00 per unit. At the comparison volume of 2,000 units the same $5,000 bill gives $2.50 per unit, and at 500 units it would give $10.00 per unit.
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Frequently asked questions
What counts as a fixed cost?
A cost that stays the same in total across the relevant range of output. A warehouse lease is fixed for the term; packaging is variable because it rises with every unit. Some costs are mixed, so split them or use a step-fixed estimate.
Why does average fixed cost keep falling?
The numerator is constant while the denominator grows, so the ratio shrinks. It approaches zero but never reaches it as long as any fixed cost remains. Capacity limits, overtime and new equipment eventually stop the decline.
How do I read the comparison volume?
It is a what-if figure, not a second actual result. Enter the output you expect after a change in sales or capacity to see how much fixed cost each unit would then carry.