pcr june 06 paper

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:26AM in AAT student discussion
Could someone put me out of my mysery and explain to me how maintenance is 440 on the flexed budget on task 2.1 d.

Thanks

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:pcr june 06 paper
    • Maintenance is a stepped cost and increases by the same amount for every 10,000 units,
    or part of 10,000 units, produced.

    Actual output was 72,000 so we need enough maintenance to produce up to 80,000 units

    50,000 units needed £275,000 of maintenance so
    10,000 units require £5,500

    and 800,000 would need £5,500 x 80,000 = £440,000
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:pcr june 06 paper

    Hi

    As it is a stepped cost, you take the budgeted figure of 275 divide by 50 to get it back to the cost for 10,000 and then times it by 80 to get it up to 80,000 (as it is 72,000 it must be rounded up).

    275/50 = 5.5 x 80 = 440.

    Hope this helps
    Eva :D

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