1. avatar says

    Dear Sir Please help me with this question please,
    An organization has the following total cost at three activity levels:
    Activity level (Units): 4000 6000 7500

    Total Cost: $40,800 $50,000 $54,800

    Variable cost per unit is constant with in this activity range and there is a step up of 10% in total fixed costs when the activity level exceeds 5,500 units,

    what is the total cost at an activity level of 5,000 units?

    A. $44,000
    B. $44,800
    C. $45,400
    D. $46,800

    Please help me with this question

    • Profile photo of John Moffat says

      Please ask this sort of question in the Ask the Tutor Forum – not as a comment on a lecture.

      Since 6,000 and 7,500 units are both above 5,500 units, the fixed cost will be the same for both.
      So use high-low on these two and calculate the variable cost per unit and the fixed cost in the normal way.

      At an activity level of 5,000 units, the variable cost per unit will be as you have calculated and the fixed cost will be 100/110 times what you have calculated.

    • Profile photo of John Moffat says

      Semi-variable is part variable cost and part fixed cost.

      The fixed cost per unit falls with higher production (because the total fixed cost stays the same); the variable cost per unit stays constant.

      So the total of the two must fall with higher production.

  2. avatar says

    Hi. I just want to say that your site is doing an amazing job in teaching us the necessary bits.

    However, I would like to know if I should study the kaplan/BPP textbooks or is it only sufficient to go through your sites lectures and notes.

    Please Advice.

  3. Profile photo of Sophia says

    these lectures are really helping and understandable for me,a Chinese,and I plan to view all the lectures,love them!especially for teachers’ British accent, that sounds gentle and beautiful~

  4. avatar says

    plzzz solve dis question 4 me wit explanition,,,,,,im hvng problem selecting the activity which has same fixed cost plzz sme1 explain……….. An organisation has the following total costs at the following activity levels: Activity level (units)16,000,,,,18000,,,,20000,,,,22,000 total costs ($)135,000,,,,140,000,,,,150,000,,,,170,000 Variable cost per unit is constant within this range of activity but there is a step up of $5,000 in the total fixed costs when the activity exceeds 17,500 units.
    What is the total cost at an activity of 20,000 units?

    • Profile photo of John Moffat says

      Have you typed the question correctly, because you have listed the total cost at an activity level of 20,000 in the body of the question?

      In general however, look at the difference between the highest and lowest as usual, but if there has been a step up in fixed costs, then 5,000 is due to the step up and the rest of the difference is due to variable costs. Then you can continue as normal – the variable cost per unit is the remaining difference in the total costs divided by the difference in the units.

      • avatar says

        sori 20000 z not there wit cost,,,,,,,in the above case if it was e.g activity lvl: 14,000,,,16,000,,,18,000,,22,000,,,,,cost($)120,000,,,,,135,000,,,140,000,,,170,000,,,,,,,hw wuld u select high low there????perhaps their z a concept of fixed cost which shuld b equal in both high n low,,,,,,,i,m jst confuse in dat,,,im confuse in selection of high low in dis kind of questions………plzz explain……

      • Profile photo of John Moffat says

        The highest level of activity is 22,000 and the lowest is 14,000.

        The difference in the costs is 170,000 – 120,000 – 50,000, but 5,000 of this is due to the step-up in fixed costs. The rest of the difference is the extra variable cost of the extra 8,000 units.

        Then you can carry on as normal.

      • avatar says

        Mr.Johnmoffat. zahidkhan2015 requested for a question to be solved and you did that. Its amazing. You are doing really a great and extra ordinary job. Hope I am able to have a face to face meeting with you.We hope to learn more and more from you. God Bless You Sir.

      • Profile photo of John Moffat says

        daudzai: Thanks for the comment. We are here to answer questions (although the best place to ask them is in the ‘Ask ACCA tutor’ forums – we cannot always read every comment on every lecture because there are too many, but we always answer questions in the Ask ACCA Tutor forums very quickly) :-)

    • avatar says

      Thank you so much once again Mr. Johnmoffat. I can not stop praising you for what you have doing to the people who want to learn and improve themselves. You are a gift of God for all of us. Though I have not yet formally started my studies but am planning to. I’ll off course resort o ACCA Tutor as you advise that is the right place to ask question and will be quickly answered. I need an advise from your goodself. I want to do FIA (ACCA Diploma). Will it be ok that I buy books and down lecture notes from Opentuition for foundation papers. Read both the books and Opentuition notes, listen to your beautiful and impressive lectures. Will this suffice to go through the examination and pass all the papers or you will advise something otherwise. Thank you once again for your generously extended help. God Bless you.

      • Profile photo of John Moffat says

        Thank you again for your comments.

        What you suggest will be sufficient. The book you do need is the Revision or Exam Kit – these contain lots of questions to practice, and that is essential.

      • avatar says

        Well I believe you don’t need to be thankful to anyone of us learning from you instead we, all, should be thankful to you and your team for what you are giving ‘KNOWLEDGE’. You reply is really really motivating and encouraging. As advised I’ll get not only the Revision or Exam Kit but the book as well. Besides, I seek your permission to take a print out of the lecture notes from the great and respectable site of Opentuition. I work for very long hours and then have to give some time to kids as well. Therefore, I would like to seek one more advise and that is how much time do I need to study daily in terms of hours. In addition to that I have another request and that is can I meet you in person, if possible. Thank you very much once again. God Bless you great Teacher.

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