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.
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.