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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › June 2012/question 1
Could you please help me to understand this sentence:
“Whilst both components are currently made in batches of 500, this would need to change to batches of 400.”
So for keypads:
26000-4000=22000
22000/500=44/batch
44/batch * 400= 17.600
I have calculated in this way, but I saw that I was wrong. If the number of batches is less (400<500) how could the cost be higher? I would appreciate if could help me realize where is my mistake 🙂
Sorry for the question 🙂
I found the mistake. 500 is not the number of batches, but the number of units in one batch 🙂 I should take a break :))
I still want to ask why fixed machine costs are considered as relevant cost?
It is because there are extra fixed costs payable.They vary with the number of setups.