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Budgeting question 11.12 bpp

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Budgeting question 11.12 bpp

  • This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.
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  • May 24, 2022 at 6:37 am #656301
    dingdong02
    Participant
    • Topics: 14
    • Replies: 1
    • ☆

    Budgeted costs and revenue for an output level of 4000 units are given below. It is known that after an output level of 5000 units there is a step up in fixed costs $1000:
    $ per unit
    Selling price 30
    Variable cost 18
    Fixed cost 4
    Profit 8
    what is the flexed budget profit at an output level of 6000 units?
    Ans) 55000
    Can you please explain this question

    May 24, 2022 at 1:07 pm #656329
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    The contribution per unit is $12.

    The fixed overheads have been absorbed as $4 per unit when the output was 4,000, which means that the total fixed costs were $16,000. If the output is 6,000 units then the total fixed costs increase by $1,000 to $17,000.

    So for 6,000 units the total contribution will be $72,000 and the total profit will be 72,000 – 17,000 = $55,000.

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