Stepped cost (Budgeting Level 4)

bdrjaleel

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

kelsmick

If the original budget was 80,000 you would divide the amount by 4 (20,000 x 4 = 80,000) this will give you the hire per 20,000 you would then need to muliply by 5 - as it is increased by 4,000 you will require an additional hire