[xross]

after valuating the stock using fifo, lifo and avco, how can you account for the totals

[xross]

Thanks a lot sir. I think I must have mis interpreted what you wrote. My bad.

[xross]

hi khan!

in my view,

variable cost = [(170000 – 5000) – 135000] / (22000 – 16000)
=30000 / 6000 = 5 per unit
fixed cost = (170000 – 5000) – (22000 * 5) = 55000 as the fixed cost.

TC = FC + VC = 55000 + 5(20000) = 155000
adding $5000 to the total cost we have $160000 as our total cost

[xross]

hallo, Mr john Moffat
-the question is saying, there is a step up of $5.000 in the fixed cost when the activity levels exceeds 17.500 units. why then are we subtracting this step up from 135000 which has the quatity which has not exceeded 17.500 unit. instead of subtracting it from 170.000 which has quantity of more than 17.500. help me to understand sir. thanx

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