budgeting exam Practice assessment 1

AATnovice

hey there

just a minor issue if anyone can help,

it is budgeting practice assessment 1 task 2.2, Im not too sure how they have come to the figure 36000 in the equipment hire box.

sorry I don't know how to get images on here to make it easier for you guys

help appreciated

many thanks

Nps

Hi,

It's because it's a stepped cost which increases every 8000 units. To produce 63,000 units you would have enough steps to make 64,000 (so 8 of them). 8 steps equal £32,000 so each step is £4000. The actual production of 68,000 units is therefore another step up so will be 32000+4000=£36000

Dahir Ahmed

Hiya
The £32,000 is based on 63,000 units (equipment hire is a stepped cost, budgeted to increase at every 8,000 units of monthly production).

63,000/8,000=7.88 (round this figure up which means each increment of 8,000 units sees a cost increase of £4,000).

The flexed budget is based on 68,000 units.

So....

Dahir Ahmed

Gotta learn how to touch type!.:laugh: