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please explain to get answer 6.69
question
High – 5000 units – overheads cost $31000 index 164 1st year
Low – 2000 units – overheads cost $8800 index 132 3 years agoto find variable cost per unit :
my working:
Output cost
5000 $31000 x 132/164 = 24951.22
(2000) $8800 x 132/132 = 8800
3000 16151.2216151.32 / 3000 = 5.38374 but question to show correct answer is 6.69
You have not said what the question asked for. I am guessing that it asked for the current variable cost, but you have calculated the variable cost three years ago!)
If you take your answer and multiply by 164/132 (to get the current variable cost) then I think you will get the same answer as in your book 🙂
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