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The management accountant of a business has identified the following information:
Activity level 800 units 1,200 units
Total cost $16,400 $23,600
The fixed costs of the business step up by 40% at 900 units.In this question answer There is 1.4F How did we get that?
If the fixed costs at levels below 900 units are F, then the fixed cost at levels above 900 units will be F + 0.4F which equals 1.4F.
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