Stepped cost (Budgeting Level 4)
bdrjaleel
Registered Posts: 0
I am currently working on Budgeting Sample Assessment no 2, and i am stuck with Task 7
Can someone please guide me how the stepped cost for Equipment hire is flexed to 84,000 whereas the original budget given in the question was 80,000 and the actual expense given was 74,000.
Additional information provided is:
Equipment hire is a stepped cost budgeted to increase every 20,000 units of monthly production.
Thanks
Can someone please guide me how the stepped cost for Equipment hire is flexed to 84,000 whereas the original budget given in the question was 80,000 and the actual expense given was 74,000.
Additional information provided is:
Equipment hire is a stepped cost budgeted to increase every 20,000 units of monthly production.
Thanks
0
Comments
-
Look at the budgeted output.
Divide by the number of units per step. (20,000) Round up to the next whole number.
This gives you the number of steps in the original budget.
Divide the budgeted cost by the budgeted ste
This gives you the cost per step.
Then look at the actual units produced.
Divide total units produced by the number of units per step and round up.
This is the flexed number of steps.
Multiply by the cost per step for the flexed cost.
The principle of rounding up is similar to ordering taxis for a group getting from A to B. If 9 people are in the group and each taxi can take 4 people max. Then you need 3 taxis.
I hope this helps
Sandy
sandy@sandyhood.com
www.sandyhood.comSandy
sandy@sandyhood.com
www.sandyhood.com0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 321 NEW! Qualifications 2022
- 164 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 87 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 273 Tax
- 135 Bookkeeping
- 7.2K General accounting discussion
- 200 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership