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Dear Anyone
CAN YOU EXPLAIN WHY WE CANNOT USE 3000 AS THE HIGHEST LEVEL ACTIVITY AND 1000 AS THE LOWEST LEVEL ACTIVITY SINCE FC AND VC ARE THE SAME WITHIN THIS RANGE?(THANK YOU)
The following question is taken from the December 2011 exam.
The following shows the total overhead costs for given levels of a company’s total output.
Cost Output
$ Units
4,000 1,000
7,000 2,000
10,000 3,000
9,500 4,000
A step up in fixed costs of $500 occurs at an output level of 3,500 units.
What would be the variable overhead cost per unit (to the nearest $0.01) using the high-low technique?
? $1.67 per unit
? $1.83 per unit
? $2.75 per unit
? $3.00 per unitThis is a forum for “general” queries that are not specific to a particular ACCA exam.
You need to post this to the MA forum with a subject line that is indicative of the nature of the question – e.g. “High-low method”
But perhaps read up on the topic/check our lecture first: https://opentuition.com/acca/ma
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