[akindeley]

Thank you secondstar.

Please I need more and comprehensive explanation on this illustration because after deducting this step increase from total cost I don’t know how to go about it it.

Please, I will like to know much about this illustration.

Thank you once again!

[akindeley]

Good day Team,
With all explanations and illustrations, I think I have gotten the gimmick. But I was working on a question, which I applied the same methods that were discusses on this forum but I got a wrong answer. Please consider the illustration.

A company has identified that total fixed costs increase by £15,000 when activity level equals or exceeds 19,000 units. The variable cost per unit is constant over this range of activity.

The company has identified the following costs at two activity levels:

Production (units) 22,000 17,000
Total cost (£) 195,000 180,000.

And the company is planning to make 20000 units and wishes to estimate the total costs associated with that level of production.

[Author]

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