Hi John,
This question relates to the F2 Mock Exam re High/Low:
'Berry has recorded the following costs over the last six month:
Month 1 2 3 4 5 6
Units Produced 3,000 1750 2,000 2,500 1,500 2,000
Total Costs £74,000 £72,750 £73,250 £75,000 £69,500 £72,750
Using the High-Low method, what would be the total cost equation?'
I had answered the question by doing 75,000-69,500/3,000-1,500= £3.66 per unit- reason for this is that £75,000 is the highest cost and £69,500 the lowest etc
The answer is saying that i should of done £74,000-69,000: i'm confused by this because £75,000 is higher than £74,000, is there something i've missed here?
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MA (F2) Mock Exam Question- High/Low
4y ago#1You should have taken the highest and lowest levels of production, not the highest and lowest costs. I do make this clear in my lectures on 'semi-variable costs'.
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