COSTS OF PRODUCTION FORMULAS Total cost (TC) = total fixed cost (TFC) + total variable cost (TVC) Total Product (TP) - Average fixed cost (AFC) = TFC ÷ output or total product or quantity Average variable cost = TVC + output or total product or quantity - Marginal cost (MC)= change in total Cost (TC) ÷ change in TP or output - Average total cost (ATC) = AFC + AVC or - Average Total Cost = TC ÷ TP - Total Revenue (TR) = price x TP %3D - Total Profit/Loss = TR – TC - Break even : TR – TC = 0 | Hypothetical problem A corn farmer produces 300 sacks of corn at 50 kgs./sack. Prevailing price of corn/sack is P1,200. He incurred the following annual expenses (P): Fixed costs: land rent @5,000; irrigation fee@3,000; warehouse @2,500; insurance @3,000; interest on loan @4,200; entrepreneuship@7,000; salaries/wages@10,000; taxes@4,600; depreciation@2,600 Variable costs: seeds@5,000; fertilizer@10,500: labor@18,000; pesticides@8,000; tractor@3,000; transportation,@3,500. Compute for: 1. Total Cost, Total Fixed Cost, Total Variable Cost 2. Average total cost, average fixed cost, average variable cost 3. Total Revenue, average revenue 4. Total profit or Loss