# Stepped Costs

Abbie28
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**42**Registered
In general i cant work out the new flexed step cost on a operating staement .... plz could anyone explain how to get the answer for a flexed budget? when it comes to practices i seriously get stuck!

## Comments

6,970Registered42Registeredit says in the book as notes the budget for the equipment hire is stepped, increasing at every 8000 units of monthly production.

budget = 63000units equipment = £32000

Actual = 68000 units equip cost = £35000

Flexed = 68000 units equip cost =???????

96RegisteredFor every 8000 units you incur a cost.

Budget set at 63000 units which divided by 8000 = 7.8.

You round up to next whole means you have 8. Think of it as if it were a teacher, in this case you need 8 teachers.

Therefore £32000 divided by 8 = £4000, ie for every chunk of 8000 units you pay £4000.

So when you flex budget to 68000 units you need another chunk of cost so at 68000 units your costs should be £36000.

So in this case you've actually saved money

Think that's right!

42Registered