Stepped costs

Becky V

Hi all i have my budgeting exam coming up soon, and i am trying to work out stepped costs.
An example i have is
cost for 7400 units £5960
the cost steps every 1000 units
forecast the cost for 9100 units

please help me work this out many thanks

Morpheus1980

I've only just got the hang of this, so I'll see if I can help...

a) If the number of units you have is 7,400, and the cost steps every 1,000 units, you simply divide 7,400 by 1,000.

b) The answer is 7.4, but you need to round it up to a full number, which will be 8.

c) You then divide £5,960 by 8 which is £745.

d) Now, divide 9,100 units by 1,000 which is 9.1. Again, you need to round up to a full number, which is 10.

e) Multiply your answer in c) (£745) by 10 and you have £7,450. This is the forecast cost for 9,100 units.

I hope I've explained that OK!

Becky V

Thank you so much, that makes perfect sense! Do you have your exam coming up soon?

Morpheus1980

I do! In just over a month's time. I quite like doing the calculations involved in budgeting and am trying to go through as many practice exams as I can at the moment. How's your revision going?

Becky V

I have got mine on the 19th March, so am starting to panic!!! I did a practice exam last night and passed but need to practice the written tasks! A weekend of revising for me!!

Morpheus1980

Yes, I'm not looking forward to the written tasks either and will also be revising over the weekend! I'm sure if you passed the exam you did last night, you should be more than ok when you come to the big day. Good luck in your revision and your exam!