QUANTITIVE BUDGET ANALYSIS. KAPLAN QUESTION 160.

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February 21, 2021 at 11:55 am #611185
ABDULLAHI312
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The management accountant of a business has identified the following information:
ACTIVITY LEVEL: 800units 1200units
TOTAL COST: $ 1640 $23600
The fixed cost of the business step up by 40% at 900 units.
what is the fixed cost at 1100units?
A) $6400 B) $7600 C) $10000(correct ans) D) $140000
I did the variable cost of $8 p.u correctly(as it was q159). at activity level above 900 the fixed cost step up by 40% therefore i feel 14000 is the correct answer. please help me understand why 10000 is the answer or is it printing error?
thanks.
February 21, 2021 at 1:22 pm #611199
John Moffat
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You have either copied the question wrongly or there is a typing error in your book.
The total cost for 800 units is $16,400 (not $1,640), and therefore the correct answer to the fixed cost is $14,000 about 900 units and $10,000 below 900 units.
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