Budgeting help again

Caff

Hello again. Could someone please help with question 15 on the osborne website. How do I work out the Equipment hire?

http://osbornebooks.rtahosting.co.uk/osborne23/q15.asp

Thank you again for all your help.

Rizwan

Caff wrote: »

Hello again. Could someone please help with question 15 on the osborne website. How do I work out the Equipment hire?

http://osbornebooks.rtahosting.co.uk/osborne23/q15.asp

Thank you again for all your help.

Hi Caff!

I'm revising for my budgeting exam too.
I've just gone throught he question and found it quite long and time consuming.
Here's how I got to the answer for equipment hire:

In the additional information we are told it's a stepped cost every 7500 units
Therefore for 75,000 units the cost is £50,000
So, 75,000 divided by 7500 = 10
and 50,000 divided by 10 = 5,000
So from here we can gather that for every 7500 units the equipment hire is £5,000
And since the flexed budget is for 80,000 units the cost is now £50,000 + £5,000 = £55,000

I hope that answers your question.

Have you done any other modules yet?

guinea pig

Hi Caff,
The equipment hire "is based on a cost for each 7,500 units or fewer"
This means that it is a stepped cost,
The original budget is for 75,000 units,
divide by 7,500 and this gives you 10 steps.
The total cost for the 10 steps is £50,000 which is £5,000 per step.
The actual budget is for 80,000 units,
divide by 7,500 and this gives you 10.66 steps, which must be rounded up to 11 steps
11 steps at £5,000 per step = £55,000
Which is the correct answer according to their solution.
Hope this helps,
GP

Caff

Thank you both for your help, it seems so simple now

guinea pig

That's good!
I don't know why, but when I replied, Rizwans answer wasn't showing! I think there is sometimes a timing delay on these answers.
GP