The Blue Ridge Furniture Factory has fixed costs of $10 million and variable costs of $5 million.If it turns out 1 million chairs a year,how much is the average total cost of producing one chair?

Variable Costs

Costs that change in proportion to the level of activity or volume of output in production.

Fixed Costs

Business expenses that remain constant regardless of the level of production or sales, such as rent or salaries.

Average Total Cost

The total cost divided by the number of units produced, calculating the cost to produce an average unit of output.