Semi-variable and fixed cost elements

Please, could someone solve this below:

Energy cost is semi-variable, with a fixed elements of £37,000
An increase in only variable cost of energy of 2%
Energy £115,000 (first scenario)
what is value of the alternative scenario?

Note: the sale volume 130,000 (first scenario) and 140,400 (alternative scenario)


  • GMS1992
    GMS1992 Registered Posts: 27
    So I think you would have £115,000 minus £37,000 giving you £78,000 variable cost for 130,000 units.
    £78,000 divided by the amount of units 130,000 =0.6
    This means the variable cost is 0.6 per unit
    0.6 x 140400 units in new scenario =£84,240 variable cost of alternative scenario, then add the fixed cost of £37000 =

  • alexnwa
    alexnwa Registered Posts: 21
    Thank you for your explanation.
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