It is important to Note before starting the solution that the Highest activity level is above 17,500 units which would mean that total costs at this activity level includes step up of fixed costs of $5,000. I proceeded to work the solution without taking this into consideration and did not get any of the answers given, so I chose the answer which was closest to the given choices, which was wrong. After reviewing the solution I still could not see why I could not figure this out, then I realized that the highest activity is over 17,500. Hope this helps my fellow students.
The pop-up solution (after you submit your answer) explains what to do.
You will have to say which part of the question or answer is not clear to you, then I will explain it. (I assume that you have watched the free lecture on the high-low method before attempting the test.)
You need to watch my free lectures on chapter 4 of our free lecture notes, because I explain semi-variable and stepped fixed costs in detail in this lecture (and I cannot type out all my lectures here 馃檪 )
(The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass Paper F2 well).
hi. there’s something i’m unable to understand. question 3. it seems that another method is being used here..and mine is actually wrong. why the answer is not so?
135000-110000/25000-20000 which equals to 5 (variable cost). the next step for me is : 135000-(5*25000)=10000.(fixed cost) and therefore, total cost=135000+(10000*5)=185000
logically, i know that the total costs for 22000 units should be lower than that of the 25000 units which is $135000. but i cant fathom where is the mistake.
Since the variable cost is $5 per unit, the total variable cost of 22,000 units is $110,000 The fixed cost is $10,000 Therefore the total cost is $120,000
ahmedfaroukmahmoudmohamedatwa says
5/5 馃檪
lofty says
salam…..
done the quiz but still have a problem with question 2, need more explanation please
John Moffat says
Did you watch the lectures before attempting the test?
You will have to say which part of the explanation that appears on the screen that you are not clear about.
peacboi says
4/5 AGAIN
John Moffat says
Good
kissme4560 says
Very amazing l got
5/5
John Moffat says
Great 馃檪
Martin says
It is important to Note before starting the solution that the Highest activity level is above 17,500 units which would mean that total costs at this activity level includes step up of fixed costs of $5,000. I proceeded to work the solution without taking this into consideration and did not get any of the answers given, so I chose the answer which was closest to the given choices, which was wrong. After reviewing the solution I still could not see why I could not figure this out, then I realized that the highest activity is over 17,500. Hope this helps my fellow students.
fpriyaaa says
thanks a lot, really helped a lot 馃檪
shanid says
Got a 5 on 5
John Moffat says
Very good 馃檪
vitulyi says
q2: why increase in variable cost is $30 000 (difference in total costs 170000-135000 minus $5000 ?)
John Moffat says
Because 5,000 of the increase in the total cost is due to the extra fixed costs.
2595mamma says
I felt well
lynnet0753 says
easy to understand
John Moffat says
Good 馃檪
toppop says
Hi , there im unable to understand question 2
John Moffat says
The pop-up solution (after you submit your answer) explains what to do.
You will have to say which part of the question or answer is not clear to you, then I will explain it.
(I assume that you have watched the free lecture on the high-low method before attempting the test.)
paulinekjl says
Can you explain on question 5?
John Moffat says
You need to watch my free lectures on chapter 4 of our free lecture notes, because I explain semi-variable and stepped fixed costs in detail in this lecture (and I cannot type out all my lectures here 馃檪 )
(The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass Paper F2 well).
ourmi1234 says
hi. there’s something i’m unable to understand. question 3.
it seems that another method is being used here..and mine is actually wrong.
why the answer is not so?
135000-110000/25000-20000 which equals to 5 (variable cost).
the next step for me is : 135000-(5*25000)=10000.(fixed cost)
and therefore, total cost=135000+(10000*5)=185000
logically, i know that the total costs for 22000 units should be lower than that of the 25000 units which is $135000. but i cant fathom where is the mistake.
please explain. 馃檨
John Moffat says
Since the variable cost is $5 per unit, the total variable cost of 22,000 units is $110,000
The fixed cost is $10,000
Therefore the total cost is $120,000
ourmi1234 says
Clear. thank u.
John Moffat says
You are welcome 馃檪
nantume says
So helpful
Got 4
John Moffat says
Well done 馃檪