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Help with Question?? CIMA - P1

  • 17-10-2009 12:58pm
    #1
    Audio
    Closed Accounts Posts: 38 ✭


    Can anyone help me with this question?

    Two flexible budgets are given below:

    Output 1,000 units 2,000 units
    Budgeted Cost $2,500 $3,500

    The total fixed costs estimated for the 2000 units budget are 20% higher than the fixed costs for the 1,000 units budget. What is the variable cost per unit of output?

    *Ive tried the high/low method but it doesnt work cause the fixed costs are increasing.

    Any help greatly appreciated...

    S


Comments

  • #2
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    fc + 1000*vc = 2500
    1.2*fc + 2000*vc = 3500

    where fc = fix cost at lower output , and vc = variable cost at higher output



    Answer: vc = 0.625


  • #3
    Audio
    Closed Accounts Posts: 38 ✭Audio


    Thats brill. Thanks for that.


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