A large Modern Corporation

The corporation has relatively few implicit costs, but generally will have some. All labor costs will be expressed in money terms (though benefits and bonuses have to be included), since the shareholders don't supply labor to the corporation as "Mom and Pop" do in a family proprietorship. It will pay interest to bondholders and dividends to shareholders. But the dividends aren't really a cost item -- they include profits distributed to the shareholders. Moreover, the typical corporation will retain some profits and invest them within the business, a "plowback" investment. Conversely, shareholders may take a large part of their payout in appreciation of the stock value and plowback investment is one reason for the appreciation.

Thus we would say that the corporation has a net equity value, that is, that the corporation "owns" a certain amount of capital that it invests in its own business (very much like the absentee owner in the first example). This capital has an opportunity cost, and that opportunity cost is an implicit cost. The stockholders, who own the corporation, ultimately receive (as dividends or appreciation) both the opportunity cost of the equity

capital and any profit left over after it is taken out.

Unit Cost

Costs may be more meaningful if they are expressed on a per-unit basis, as averages per unit of output. In this way, we again distinguish

Average Fixed Cost (AFC)

This is the quotient of fixed cost divided by output. In the numerical example we are using, when output is 4020 (in the table) fixed cost is 80000, so AFC is 80000/4020=19.9 

Average Variable Cost (AVC)

This is the quotient of average cost divided by output. In the example, at an output of 4020 the variable cost is 350000, giving AVC of 350000/4020=87.06.