Buy or make decisions

I am looking for the answers of b and c, which are respectively 80000 and 100000, but have no clue how they come to that?

Any help will be much appreciated
AAT Level 2. 2018
AAT Level 3. 2018
AAT Level 4.
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Comments

  • douglasstrouddouglasstroud Registered Posts: 99

    Hi, you seem to be forgetting that the fixed costs will stay the same regardless of the changes to the amounts produced


    B = Sales of 8,000 x £70 = 560,000
    Variable costs of 8,000 x £30 = 240,000
    Fixed Costs of 10,000 x £24 = 240,000
    Total Costs of 240,000 + 240,000 = 480,000

    Profit of 560,000 - 480,000 = 80,000


    C = Sales of (6,000 + 4,000) 10,000 x £70 = 700,000
    Variable costs of 6,000 x £30 = £180,000
    Fixed Costs of 10,000 x £24 = £240,000
    Supplier Costs 4,000 x £45 = £180,000
    Total Costs of 180,000 + 240,000 + 180,000 = 600,000

    Profit 700,000 - 600,000 = £100,000

    HTH
  • dumutrobadumutroba AAT Student, AATQB Posts: 226
    Thanks so much for making the effort to answer!
    I did forgot for a moment about the fixed costs, but later that evening I came to the same answer as you! Glad you confirmed that
    AAT Level 2. 2018
    AAT Level 3. 2018
    AAT Level 4.
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