In chapter 2 example 2 – variable cost.
In the question if the highest output is 20,000 units = $340,000 and the lowest is 10,000 units = $220,000
Can you explain why you have the cost per unit as $1.20/unit. I got $12/unit.
In said question, there is an increase in production where any production rises over 30,000 units will attracted a 50% increase in fixed cost.
You have $220,000 – ($1.2 x $10,000)= $100,000 which is confusing because if the cost per unit is correct therefore the answer will be for the fixed cost should be $208,000
If I uses the $12 per unit then the answer will be $220,000 – ($12 x $10,000) = $100,000
I noticed that too $12 is the correct cost per unit.
They typed the wrong cost per unit but used the rest of the figures as if they had put in the correct cost of $12 per unit
There were a few problems with FA2 as well and I highlighted them and the notes were reissued.
If we all highlight the errors, the correct ones will be reissued for those coming after us but it does make the studying a little bit more difficult as you question yourself when you get a different answer & spend longer on it than you need to trying to figure out if it’s you or the notes.
Then on the part of the example for costs at output
25,000 & 35,000 they have used $1.20 instead of $12
Answer should be
25,000: 100,000 + $12 x 25,000 = 400,000
35,000: 150,000 + $12 x 35,000 = 570,000
Can any one else agree that this is correct?
Are you referring to MA2 course notes on opentution provided “MA2 course notes” or the BPP or Kaplan books?
Ma2 course note on opentution
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