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Can you please explain why, when calculating mat, labor costs p.u. , and FC, they use only first column (200.000 units)? Because demand is 250.000 units?
Thanks
For material and labour you can use any column – they are variable costs and so all columns would give the same cost per unit.
For overheads they have not only used the first column. The overheads are semi variable and therefore you have to use the high low method to calculate the variable and the fixed overheads.
The high-low method is revision of Paper F2 and is revised in chapter 12 of our free lecture notes together with the free lecture that goes with it.
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