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Sir,
Answer of part “B” takes the variable cost total $3540,000, which is mix of 120,000 for A and 45,000 for B production level.
However, the production mix is 144,000 for A and 54,000 for B.
Why they took variable cost on production of 120000 A and 45000 B.
It should be 144000 x 28 and 54000 x 4
Thanks
I am sorry, but I do not have the BPP Study Text – only the Revision Kit – and so I am not able to help you because I cannot see the question or the answer.
(If the variable cost total is for variable costs excluding materials used the the calculation of the total factory cost, then they should use the budgeted total cost (so based on budgeted production) because we assume that all costs except for materials are fixed). I explain this in my free lecture. However, again without seeing the question I cannot be sure that this is the reason.)
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