When prepare flexible budgets are using marginal costing method to compare actual activity level whether is correct ?
and all the semi-variable costs must be resolved into their fixed and variable components
whether it must using high low method ?
example :
actual units produced and sold 11,600
power cost - $17,000 - 10,000 units , $18,000 - 11,000 units , $19,000 - 12,000 unit
my working to find power costs to compare actual sales & costs :
$19000 - $17000 = $2000 , 12000 units - 10,000 units = 2000units
VC per unit cost $1
FC = $19000 - ( 12000 units x $1) = $7000
11,600 x $1 + $7000 = $18,600
therefore $18,600 is total amount to compare with the actual sales & cost ?
and so on others semi variable cost follow the same?
thank you
Ask the Tutor ACCA MA
Preparation of flexible budgets
Yes - everything that you have written is correct :-)
Sign in to reply to this topic.
