Total Target Costs

ggp25
ggp25 Registered Posts: 7 New contributor 🐸
in Applied Management Accounting
Hi,

Is anyone able to confirm how to answer the below question (Part B). Increased selling price per unit and Variable costs per unit but unsure on the other parts.




Many thanks in advance

Comments

  • anony123
    anony123 Registered Posts: 478 Dedicated contributor 🦉
    If you are doing l3, not sure if you are, you do need to go this far in depth. Just remember the formulas.
  • ggp25
    ggp25 Registered Posts: 7 New contributor 🐸
    @anony123

    Its from level 4 - Applied management Accounting.

    Are you able to help?
  • anony123
    anony123 Registered Posts: 478 Dedicated contributor 🦉
    Nope, sorry bro. Didn’t do L4.
  • Oscarcoly
    Oscarcoly Registered Posts: 2 New contributor 🐸
    Hello,

    From my understanding, there has been an increase in selling price of £2 per unit which makes now the selling price per unit £22 compared to £20 before.

    Total cost = Fixed cost + Variable cost => (270,000+450,000)/45,000units = £16/unit

    Profit/unit= Selling cost/unit - Total cost/unit => 22-16= £6/unit

    Hope that helps.
  • Aditi
    Aditi Registered Posts: 14 New contributor 🐸
    Yes, this solution is very helpful. My ACCA advanced taxation instructor also helped me solve a similar question using this method.

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