Hello, for question 3, I used the high low method to answer this question and I didn鈥檛 get an answer anywhere near 120,000.

I got to the point of calculating that the cost per unit was $5 and then I determined the fixed cost of 100,000 and I multiplied 22,000 units by 5 and added the fixed cost which was a number way higher than 120,000.

How come the high low method didn鈥檛 work here and how would I go about solving a question like this?

Please can you expand on the explanation provided.

Yes I have been watching the free lectures and thank you so much for your response and the help. I really appreciate these lectures and everything OpenTuition has to offer.

The difference in the total cost is $35,000. $5,000 of this is the extra fixed cost and so only the remaining $30,000 is the extra variable cost due to producing more units.

5,000 of the increase in the total cost is due to the step-up in fixed costs, so only the rest of the difference is due to variable costs. You can find the workings by clicking on ‘review quiz’ after submitting your answers.

The fixed cost must be the same at each level, and therefore the only difference between the total cost of 22,000 units and the total cost of 20,000 units must be the extra variable cost f the extra 2,000 units.

sxrxxwxn says

Hello, for question 3, I used the high low method to answer this question and I didn鈥檛 get an answer anywhere near 120,000.

I got to the point of calculating that the cost per unit was $5 and then I determined the fixed cost of 100,000 and I multiplied 22,000 units by 5 and added the fixed cost which was a number way higher than 120,000.

How come the high low method didn鈥檛 work here and how would I go about solving a question like this?

Please can you expand on the explanation provided.

Thank you so much

John Moffat says

The high low method does work here!!

The variable cost per unit is (135 – 110,000) / (25,000 – 20,000) = $5

The fixed cost is therefore 110,000 – (20,000 x 5) = $10,000. I don’t know how you managed to get it to be $100,000.

Therefore the total cost for 22,000 units is (22,000 x 5) + 10,000 = 120,000

Have you watched my free lectures on this?

sxrxxwxn says

Yes I have been watching the free lectures and thank you so much for your response and the help. I really appreciate these lectures and everything OpenTuition has to offer.

mdylonelone77@gmail.com says

No, I don’t leave.. I’m still pursuing ACCA Financial and Management

Accounting Level ( FA 2 and MA 2)

Salmaan@12 says

would some more q8estion like q2

John Moffat says

You should buy a Revision Kit from one of the ACCA Approved Publishers. It is full of exam standard questions for practice.

Chapfura says

sorry sir i need a better explanation on this question

John Moffat says

You do not say which question you are referring to!!!

(I assume that you have watched the free lectures)

lucrishazimbo says

Please Sir l need better explanations on q2 and q3

calton says

In question 2 where did the 30,000 come from

John Moffat says

The difference in the total cost is $35,000. $5,000 of this is the extra fixed cost and so only the remaining $30,000 is the extra variable cost due to producing more units.

chloethornton1992 says

Hi can you please explain how the difference of costs 35000 was calculated?

John Moffat says

I assume you are referring to question 2, in which case the difference between the total costs is 170,000 – 135,000 = 35,000.

darshan.69 says

question second.

the variable cost (170000 – 135000)/(22000 – 16000)

is 5.83 ig

considering that the i got 163320 as my answer

John Moffat says

5,000 of the increase in the total cost is due to the step-up in fixed costs, so only the rest of the difference is due to variable costs.

You can find the workings by clicking on ‘review quiz’ after submitting your answers.

darshan.69 says

thank you for your assistance

got that.

John Moffat says

You are welcome 馃檪

babylyn says

How was the total cost for 22000 units derived after find the variable cost per unit which is $5

For Q3

John Moffat says

The fixed cost must be the same at each level, and therefore the only difference between the total cost of 22,000 units and the total cost of 20,000 units must be the extra variable cost f the extra 2,000 units.