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MA (F2) Mock Exam Question- High/Low

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › MA (F2) Mock Exam Question- High/Low

  • This topic has 1 reply, 2 voices, and was last updated 10 months ago by John Moffat.
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    Posts
  • March 31, 2022 at 5:37 pm #652436
    jvowles
    Participant
    • Topics: 3
    • Replies: 0
    • ☆

    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?

    April 1, 2022 at 7:29 am #652489
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    You 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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