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  1. Your previous comments explained that,
    “service businesses do not have production costs. Production costs are only when they are producing/making goods”

    However, in the lecture notes, it was explained that Indirect production costs are costs incurred when making a product or service. Don’t service businesses fall under this description?

      • You should ask this kind of question in the Ask the Tutor Forum – I do not always see comments on lectures.

        It is playing with the words really. Strictly production costs only arise when something is actually being produced. However indirect costs are incurred for every type of business.

  2. Hello sir,

    Is the rent of a shop (e.g. travel agency helping people book tickets) production cost or non-production cost?

    Since the service is produced there, I am wondering whether it belongs to production cost.

    Thanks!

      • Answering to John Moffat

        I do not think so … I think service businesses have a production, they produce services as a goods. so in this case rent of shop (e.g. travel agency helping people book tickets) is an production cost.

  8. This was a amazing lecture have done f2 but resited for the exam over 3tyms can you please give a site where I can get questions as over the website there are very few questions on a particular topic, and as well the link to ask your tutor question , I read this on your above comments, maybe I can find my answers there

  13. Dear Sir Please help me with this question please,
    An organization has the following total cost at three activity levels:
    Activity level (Units): 4000 6000 7500

    Total Cost: $40,800 $50,000 $54,800

    Variable cost per unit is constant with in this activity range and there is a step up of 10% in total fixed costs when the activity level exceeds 5,500 units,

    what is the total cost at an activity level of 5,000 units?

    A. $44,000
    B. $44,800
    C. $45,400
    D. $46,800

    Please help me with this question

    • Please ask this sort of question in the Ask the Tutor Forum – not as a comment on a lecture.

      Since 6,000 and 7,500 units are both above 5,500 units, the fixed cost will be the same for both.
      So use high-low on these two and calculate the variable cost per unit and the fixed cost in the normal way.

      At an activity level of 5,000 units, the variable cost per unit will be as you have calculated and the fixed cost will be 100/110 times what you have calculated.

    • Semi-variable is part variable cost and part fixed cost.

      The fixed cost per unit falls with higher production (because the total fixed cost stays the same); the variable cost per unit stays constant.

      So the total of the two must fall with higher production.

  16. Hi. I just want to say that your site is doing an amazing job in teaching us the necessary bits.

    However, I would like to know if I should study the kaplan/BPP textbooks or is it only sufficient to go through your sites lectures and notes.

    Please Advice.

  17. these lectures are really helping and understandable for me,a Chinese,and I plan to view all the lectures,love them!especially for teachers’ British accent, that sounds gentle and beautiful~

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