Cost Classification and Behaviour part 2 – ACCA Management Accounting (MA)
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Is there any difference between semi-variable costs and semi variable/fixed cost?
They both mean the same.
In example 6, total costs for 2 different levels of output are given. and as you explained in the lecture the total costs given are the semi variable costs. does it mean that the total cost consists of only one semi variable cost like electricity for factory(which includes electricity to power the machines and electricity to light the factory) or is it that the total cost can include both fixed and variable costs like rent of the factory, electricity to power the machines and therefore the total cost is being called a semi variable cost?
It means that part of the cost is fixed and part is variable (there might be several fixed costs and several variable costs).
why is it because of the “linear assumption” that all costs can be categorized as either fixed or variable?
It is not because of the linear assumption. It is simply that in Paper MA calculations we assume that the variable costs are linear.
Another feedback I would add would be that you could have explained in regards to the fixed cost per unit graph, that how much ever unit we increased and the fixed cost thus reduced per unit, – there would always remain a fixed cost – how much ever small – it would never reach zero. And that is why the graph , although curving downwards, never reaches zero.
I really like to once again appreciate your amazing skills of making difficult sums and explanations sound from complicated and confusing to logical and simple ! Greatly appreciate your amazing project. Helps seekers of knowledge many folds. You are appreciated.
That is of no relevance for the exam 馃檪
Hello good sir,
You make complicated problems seem so logical and thus turn them simple. Hats off to you, good sir.
Although, this chapter in my local tutor鈥檚 provided notebook, also covered standard deviation and other such formula related calculation problems. I see it excluded in your current cost behavior lecture. I hope you do cover them somewhere later on.
Again, grateful for your generous services ! May God grant you your return.
You have asked elsewhere the same question and I have answered it. Standard deviation etc are covered later in our notes and lectures and have nothing to do with cost behaviour.
I encountered a problem when using ask forum can you help please
Regarding the HIgh – Low method
Would it be okay if we mix up two different outputs for calculating the variable cost?
Yes, but only if the relationship is perfectly linear i.e. that the variable cost per unit stays the same. In theory it should stay the same but in practice it might not.
Hi, I have been studying this topic and have come across a question using high low method with stepped fixed cost.
Question: An organisation has the total cost at three activity levels. Activity levels (units) 4000, 6000, 7500. Total costs $40800, $50,000 and $54800 respectively.
Variable cost per.unit is within this activity range and there is a step up of 10% in the total fixed costs when the activity level exceeds 5,500 units.
What is the total cost at an activity level of 5000 units?
Solution
VC /unit = [(54800-50000)/(7500-6000)]= $3.2
Total FC above 5500 units= (54800-(7500*3.2)=$30800
This part I totally understand.
What I don’t understand is how the total FC below 5500 units.
As per solution
Total FC below 5500= 30800/110*100= $28000
Where did it get the 110 and why multiply by 100??
Kindly explain.
Thanks and regards
Please ask this kind of question in the Ask the Tutor Forum and not as a comment on a lecture.
u r a fantastic lecturer !
Sir I have a question the fixed variable cost how does it apply these days that we have metered electricity bill?
Because one can use two meters one for production machines the for lightening.
The fact they are metered is of no relevance. The lighting cost and the heating cost would be dealt with separately.
Hi, Your lectures are top quality, thank you so much. Can I just confirm this is for (RFQ Level 4) exams? I’ve already completed the introductory and intermediate level ( RQF Level 2 &3) with ACCA-X and I just wanted to make sure this is for level 4 exams as the lesson feels similar to the intermediate level. cheers
Hi, Yes this is for Level 4 FMA
corymason98, Thank you for the clarification, much appreciated.
Thank you very much!!!
thanks for the video, great explanation.
Thank you for your comment 馃檪
great lecture 馃檪