Cost and revenue question help

lana265

Does anyone know how to work out the fixed element on the practice assessment 1, question 2.1 please?

Im trying to find the fixed element for 2 different unit amounts and I just cant seem to do it.

Thanks

Nie

You need to use the high-low method.

3000 batches = £7380
1200 batches = £3780

Calculate the difference between the two.

1800 batches = £3600

Divide 3600/1800 to find out what one batch with cost... 1 batch = £2.

Put that £2 back into either of your original equations
3000 * £2 + fixed cost = £7380
fixed cost = 7380-6000= £1380

If you've done your maths right then your numbers will work in the other equation as well (1200 * £2 + 1380 = £3780)