AAT Mock exam 2 - Task 3 fixed costs question (Sept 2021 version)

JSmith

The answer is £412,000 but I am struggling to work out how to get that answer.

Any help would be very much appreciated!

Pian32

Looking at this there feels like there is more to the question. What was part i)?

For the Fixed assets you'd take the Overheads (288,000) and add in other fixed costs but from that list there aren't any values that can be be put in. I'm guessing that part i has you calculate the depreciation which would be 124,000 and would make up part of the fixed cost.

JSmith

Apolgies, this is the full task with answers with part D ii) being the tricky part for me

Pian32

Thanks for the full question. This confirms what I suggested above.

Your fixed costs are the overheads plus the yearly depreciation.

288,000 +124,000 = 412,000

Depreciation counts as a fixed cost in most cases due to the way it's included. The amount of production in this case is irrelevant and it's solely based on the time it has been held.

JSmith

Thank you very much for taking the time to help. Really appreciate it.