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Hi ! Sir recently i faced a question concerning about using of stepped fixed cost.
Total fixed cost is fixed $300 upto 80 units, there after $50 will increase with every increase of 25 units.
Activity variable cost variable cost/unit fixed cost total cost
75 $5 $375 $300 $675
140 $5 $700
230 $5 $1150
380 $5 $1900
490 $5 $2450You haven’t said what the question wants 🙂
140 units is 60 more than 80 units.
60/25 = 2.4, and so the fixed cost will have increased by 2 x $50 = $100
So the total fixed cost will be 300 + 100 = $400.
So the total cost will be (140 x $5) + $400 = $1100
(Same approach for the others)
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