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Hi sir, could you help me with this question?
Activity level (units) 8000 13000
Cost 22000 31000Fixed costs are constant in this range of activity and variable cost per unit decreases by 1.5 per unit when activity level exceeds 12000 units.
What is the total cost for 16000 units?
I get the logic behind it, but it doesn’t add up. Could you tell me the step by step workings with explanations
It won’t add up, because on the figures that you have typed then it is impossible (the fixed costs would end up being negative, which is not possible) 🙂
Please check that you have typed the whole question perfectly (or if it is a past exam question, or a question in the BPP Revision Kit, then tell me which one so that I can check myself).
If you have copied it perfectly, then there is a mistake in your book 🙂
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