AAT Prictice Assessment Budget (Level 4) Questions April 2010

JnClaude E Clifford

Searching for help:

Can anyone share light on a Question in the Level 4 Budgeting April 20010:

Task 2.1

I need the working for Equipment hire:

Notes per question; The budget for equipment hire is stepped, increasing at every 8000 units of monthly production.

• Budget Units 63,000 cost Budget units £32,000.00.
• Actual units 68000 cost of Actual £35,000.00

I need the calculate the flexed budget cost of the 68,000 units.

AAT answer with no workings: 68,000 units Total cost £36,000.00

I would assume at a stepped cost the increase for 63,000 units to 68,000 (68,000 - 63,000= 5000) there the cost remains at £32,000.00.

HELP HELP

Joe Barraclough

Hi

i took my budget exam yesterday so i hope this helps .

i think you are looking at it wrong, it looks like you are confusing and mixing up stepped with semi-variable.

i would start with the following

63000/8000= 7.875 which means its in the 8th stepped cost bracket
68000/8000=8.5 so this is in the ninth

32000/8=4

4x9 = 36000

so the budgeted should be 36000

sorry if this isnt very clear i will subscribe so if u need anything cleared up just ask

Diddy Mau

Joe Barraclough wrote: »

Hi

i would start with the following

63000/8000= 7.875 which means its in the 8th stepped cost bracket
68000/8000=8.5 so this is in the ninth

32000/8=4

4x9 = 36000

so the budgeted should be 36000

sorry if this isnt very clear i will subscribe so if u need anything cleared up just ask

This is correct, as its stepped its an increase for every set amount.
its like saying if you produce 1-999 units you will be charged £1,000
if you make 1000-1999 units its then £2,000