FTC - Unit 6, Chapter 1, Activity 5. Help!

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
I just wanted to check I'm not being ditzy on one of the questions. If someone who has this FTC book could help me, I'd be grateful. I am doing Activity 5:

"A manufacturing business has variable production costs of £2 per unit and fixed costs of £50000. These include rent of £18000 per annum. If more than 50000 units of the product are made, then additional floor space must be rented at a cost of £20000 per annum. What is the total cost of production and cost per unit at the following production levels:

i) 40000 units
ii) 50000 units
iii) 60000 units?"

This is my answer for part i:

I) 40000 units

vc = £2 per unit
fc = £50000

vc 80000
fc 50000
130000 Total Cost of Production

3.25 Cost Per Unit

This is the answer for part i from the book:

40000
units

Variable Production Costs

40000 x £3 120000

Fixed Costs 50000

Additional rentals -
Total Production Cost 170000

Cost Per Unit 4.25



Is the answer in the book wrong then? Or am I just not reading the question correctly? I hope it's just me, cause it's quite frustrating to think I'm getting it wrong if I'm not, esp when I'm not too confident with this unit. I've just switched from the BPP after having similar problems.

mi|kshake~

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FTC - Unit 6, Chapter 1, Activity 5. Help!

    I can't answer your question directly, but it seems that we are at similar stages of our studies (I am also with FTC) and although the new layout books look nicer, I have noticed quite a few errors - particularly bits missed out.

    I was reading for Unit 6 yesterday, and right at the end of an example they introduced a totally new element. It didn' affect the answer, butit did make me think "Where the blue-rinsed h*ll did that come from???"

    So basically I wouldn't be surprised.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FTC - Unit 6, Chapter 1, Activity 5. Help!

    I think it is just a misprint in the question.

    Variable production cost per unit should be £3 according to the answer and not £2 as shown in the question.

    I to am just about to start units 5&6 with FTC.

    Andy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FTC - Unit 6, Chapter 1, Activity 5. Help!

    Thanks a lot! I needed a bit of reassurance!

    mi|kshake~

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