# Cost and Revenues Task 6 Activity effect

moneeb12
Posts:

**2**Registered
Can someone be kind enough to thoroughly explain task 6 of assessment paper 2 on the AAT Website.

Much appreciate would be tremendous!

Much appreciate would be tremendous!

## Comments

75RegisteredCertainly - no problem. What you are essentially trying to do is work out the cost at different levels of activity. So, taking each section one at a time:

Sales revenue per mile if the contract is 14,000 miles

Variable cost per mile if the contract is for 18,200 milesFixed cost per mile if the contact is for 15,600 milesTotal cost per mile if the contact is for 15,600 milesFinally Profit per mile if the contact is for 18,200 miles- Same method as above but for 18,200 miles.

- Once you have workout out your total sales revenue and total costs, you can work out your profit (sales revenue minus total costs) and then divide by 18,200 to get 6.90

Hope that helps.10RegisteredPlease can you explain the profit per mile (for18,200 miles) in greater detail or show me the breakdown line by line, as I cannot seem to work this last one out and it's driving me mad!

Thanks

23RegisteredVariable costs = 21,840 + 14560 + 20020 = 56420 worked out in part 2 -

Fixed Costs 54,600 = 125580 Profit / 18200 = 6.9 profit per mile