what is the total cost formula 
the total cost formula combines a firm s fixed and variable costs to produce a quantity of goods or services to calculate the total cost add the average fixed cost per unit to the average variable cost per unit multiply this by the total number of units to derive the total cost the total cost formula is important because it helps management calculate the profitability of their business it helps managers pinpoint which fixed or variable costs could be reduced to increase profit margins it also helps managers determine the price point for their products and compare the profitability of one product line versus another 