Calculating Total Fixed Cost

Explanation:

Fixed Cost Calculation: The fixed cost can be calculated by subtracting the total variable cost from the total cost. Total Variable Cost = Average Variable Cost x Quantity of Output. Given that the total variable cost is $7,200 and the average variable cost is $90, we can calculate the quantity of output: $7,200 = $90 x Quantity of Output. Therefore, Quantity of Output = $7,200 / $90 = 80.

Total Cost Calculation: The formula for average total cost is Average Total Cost = Total Cost / Quantity of Output. As the average total cost is $130 and the quantity of output is 80, we can find the total cost: Total Cost = Average Total Cost x Quantity of Output = $130 x 80 = $10,400.

Fixed Cost: The fixed cost is the difference between the total cost and the total variable cost. Hence, Fixed Cost = Total Cost - Total Variable Cost = $10,400 - $7,200 = $3,200. Therefore, the total fixed cost is $3,200.

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