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Total costs

This topic has 6 replies, 2 voices, and was last updated 2 years ago by John Moffat.

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July 15, 2022 at 9:21 pm #660629
Safiya.12345
Participant
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A company has been reviewing its total costs over the last few periods and has established the
Period 1,2,3
Sales units 225,150,350
Total cost
2300,1500,2800 respectively
The company is aware that fixed costs increase by £500 when sales exceed 200 units.
Ans 1620
July 15, 2022 at 9:24 pm #660630
Safiya.12345
Participant
- Topics: 65
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Sir shouldn’t the ans be 2120
2800-1500-500/350-150= 4
Fc is 2800-(350×4)=1400
Total costs
180×4 +1400=2120
Your feedback would be really helpful
July 16, 2022 at 9:59 am #660665
John Moffat
Keymaster
- Topics: 57
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You have not typed what the question is asking for.
July 16, 2022 at 10:07 am #660667
Safiya.12345
Participant
- Topics: 65
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Total cost at sales level of 180 units
July 16, 2022 at 10:15 am #660672
John Moffat
Keymaster
- Topics: 57
- Replies: 54655
The fixed cost that you have calculated of 1,400 is for levels above 200 units.
180 units is below 200 units and therefore the fixed cost is $500 lower and is only $900.
July 16, 2022 at 1:45 pm #660679
Safiya.12345
Participant
- Topics: 65
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Sir r if TC ay 200 units is asked then Fc would be 1500-(150×4) 900 since 500 increase only of sales exceed 200 units
July 16, 2022 at 3:37 pm #660684
John Moffat
Keymaster
- Topics: 57
- Replies: 54655
Correct.
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