Total Target Costs

ggp25

Hi,

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




Many thanks in advance

anony123

If you are doing l3, not sure if you are, you do need to go this far in depth. Just remember the formulas.

ggp25

@anony123

Its from level 4 - Applied management Accounting.

Are you able to help?

anony123

Nope, sorry bro. Didn’t do L4.

Oscarcoly

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

Yes, this solution is very helpful. My ACCA advanced taxation instructor also helped me solve a similar question using this method.

ggp25

Thank you both.
@Aditi or @Oscarcoly - are you able to confirm how to calculate:
Target total profit per unit
Target total cost per unit
Target fixed cost per unit
Target sales volume