BPP kit – Question 19 Pixie Pharmaceuticals

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This topic contains 2 replies, has 3 voices, and was last updated by avatar perist1984 2 years, 4 months ago. This post has been viewed 43 times

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    acltang72
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    Part B

    For the basis of cost why is fixed costs not included? It only uses variable. Should the question have been more specific, or is it a general rule to do this calculation?


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    accaman
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    The ‘imported price’ is (think about it) the variable cost per unit – no fixed overhead is absorbed in this price. One extra unit would cost the same again. In order to compare like with like you have to calculate the internal equivalent.


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    perist1984
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    For the basis of cost why is fixed costs not included? It only uses variable. Should the question have been more specific, or is it a general rule to do this calculation?

    i agree if fixed costs are included than pixie would subcontract fairyoxide and spritealite and continue to produce goblinex.

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