# Stepped fixed costs practice question

SCloMar
Posts:

**8**Registered
Hi all

I have recently started studying Management Costing AAT Level 3. I was wondering if some generous person could help with a question I am trying to do about working out total stepped fixed costs. I have attached a pic - its from Osborne Tutor Zone Practice assessment 1 - task 8. The one I am struggling with is determining the

Using common sense I can guess the answer is £10 000 but I have no idea why? Is there a formula for working this out? I am assuming the high low method would not work here?

I used this forum a few times last year and found it so useful, so I am so hoping that a very kind and clever person can help explain this one to me. Thank you so much in advance.

Sarah

I have recently started studying Management Costing AAT Level 3. I was wondering if some generous person could help with a question I am trying to do about working out total stepped fixed costs. I have attached a pic - its from Osborne Tutor Zone Practice assessment 1 - task 8. The one I am struggling with is determining the

**Cost of 3000 units for Cost Classification 3**

Using common sense I can guess the answer is £10 000 but I have no idea why? Is there a formula for working this out? I am assuming the high low method would not work here?

I used this forum a few times last year and found it so useful, so I am so hoping that a very kind and clever person can help explain this one to me. Thank you so much in advance.

Sarah

## Comments

8Registered90RegisteredBut i agree and remember this question confusing me as I didn't feel there was enough information.

8RegisteredWould be good to get your thoughts on it though? As I said any help is really appreciated! And Thank you for taking the time to reply xx

90RegisteredIf you needed 2001 units you need a 2nd machine which again has the fixed cost value but you can now manage up to 4000 units total.

It means whenever you reach the limit you have to pay the cost up to the next full level and can't just have a partial payment.

8RegisteredLast thing, do we always assume that the "step up" in costs is always the same value? So in my original question, the step is always by £5000 for every 2000 units? Sarah x