- This topic has 1 reply, 2 voices, and was last updated 2 months ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
ACCA Options: NEW MOCKS, debrief videos and "Read the Mind". Learn more >>
20% off BPP Books for ACCA & CIMA exams - Get BPP Discount Code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Budgeting question 11.12 bpp
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
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.