Bgt - step cost

MWAUGH1983

Hi,

Step cost are proving to be a bind.

On the practice assessment 1 on question 2.2 on operating reprt how are figures calculated for energy and equipment? - I know there a variable element but where is the fixed part worked out?

Cheers
Martin

wbauk2002

High Low Method

missm4ry4m

Hello,

For the semi-variable cost: you're already given the variable cost per unit so you multiply this with the amount of units and the remaining cost if fixed.

I just realised your exam is today. Hope it went well!!

MWAUGH1983

Hey missm4ry4m,

Cheers for that; when you say the rest is fixed what would that be the remaining of - would that be the budget amount for say energy?

Well I did ok just think I lost marks on the work schedule and also this the written element were a bit ropey as well and I didnt finish the last question. Nothing I can do just wait the 6 wks.

Have you done bgt?

Martin

Nps

You know that the energy budget for 63000 units is 151000. You are also told that 63000x2 is the variable part of this figure, hence the fixed portion must be 151000 minus (63000x2) = 25000.

When applying to this fixed amount to the flexed budget, you get 25000 + (68000x2) = 161000.

A little bit late I'm afraid but I hope the exam went well nevertheless.

missm4ry4m

Hi

Nps1976 explained it perfectly! Good luck with your result.. Meanwhile concentrate on your next unit!

Nps

And for equipment, you know the budget is £32000 for 63000 units and this figure is valid up to the next multiple of 8000. Therefore you know that the next stepped increase is due at 64000 units. Up to this point, there have been 8 steps in cost (64000/8) therefore each stepped increase must be 32000/8 = 4000.

Your flexed budget is for 68000 units which you now know only results in one extra stepped cost increaseas it is between 64000 and 72000 units, therefore the flexed budget must be 32000 + 4000 = £36000