Stuck on a Kaplan mock cost and revenues question ?
topcat
Registered Posts: 452
Hi all
i have attached mock test 1 answer/question to 2.1 of kaplan online as a pdf .
I can not see how they get Q14 and Q15 of question 2.1 i have tried the HI/LOW method with no success in getting the answers they have..
Q5 and Q6 don't make a great deal of sense either question states up to 4000 not including ..
if anyone would mind helping me out i would appreciate it please:001_smile:
i have attached mock test 1 answer/question to 2.1 of kaplan online as a pdf .
I can not see how they get Q14 and Q15 of question 2.1 i have tried the HI/LOW method with no success in getting the answers they have..
Q5 and Q6 don't make a great deal of sense either question states up to 4000 not including ..
if anyone would mind helping me out i would appreciate it please:001_smile:
0
Comments
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They go up by 50% when production goes over 4000, so for 5000 units, the fixed costs are 1.5 times the fixed costs for 3000 and 4000 units.0
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So as per the above post, questions 5 & 6 are the same as the fixed costs for 3000 units.0
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Hi topcat,
it says the fixed costs are fixed up to 4000 units so the fixed costs stay the same for Q5 and Q6.
Above 4000 units it increases by 50% so £1200 x (1+50%)=£1800 (Q14) and £2000 x (1 +50%) = £3000 (Q15)
There is no need to use the high low method as these are not semi variable costs.
I hope this helps,
MN0 -
thank you both how do you get the 1.5 times greater i am sure there is a formula for percentage change but can not think of it ?0
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It is 50% higher, so half again. 1200/100 x 150, or on a calculator, you can type 1200 x 150%
Just divide any figure by 100 to get 1%, then multiply by whatever % you need.0 -
1.5 - .5 being 50%
The question scenario says 'the existing fixed costs are fixed with a production of up to 4000 units. If output exceeds 4000 units, these fixed costs will then increase by 50%'.
Therefore take the fixed cost and multiply by 1.5 - this being 100% (the original fixed cost) and 50% of the original fixed cost.
Does this help?~ An investment in knowledge always pays the best interest ~Benjamin Franklin0 -
Kept reading all your replies last night but would didn't make sense.
Looked at in this morning all makes perfect sense
Thank you all very much for your help i am very grateful, really don't know what i would do without you all0
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