unit 6 Twistweave simultation

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kerryhill100
kerryhill100 Registered Posts: 121 Dedicated contributor 🦉
in AAT Level 3 (Level 6 in Scotland)
hi,

I was wondering if anyone has completed this simulation or if anyone can assist me with the following question as struggling to grasp it!!

question 2.1

output 1000 2000

direct cost 200000 300000

indirect labour 65000 90000

depreciation 21000 21000

Premises costs 13000 13000


I need to identify the fixed, variable and semi variable costs and then seperate any semi variable costs int there fixed and variable parts.

I have depreciation and premises costs as fixed

direct cost as variable

indirect labour as semi variable. - I am struggling to see how I break this figure down into fixed and variable costs? can anyone offer any advise?

thank you!

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  • kerryhill100
    kerryhill100 Registered Posts: 121 Dedicated contributor 🦉
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    oh no!!


    is there no one who can help??
  • snowmarauder
    snowmarauder Registered Posts: 99 Regular contributor ⭐
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    premises costs will have a fixed cost for rent/lease and then your utilities rates ins so these will be different in both years so rates variable and utilities semiv as have a fixed element as standard charge and then your usage on top. dep is fixed as you will use it looks like it is straight line % as same amount for both years, labour can be variable or semi as they might use agency staff on top of pemanent. but they might be indirect labour, or this might be for office, cleaning supervisory. There are that many different elements. Did you put the whole question down as you havent give and information for consideration, or is it just a homework question from starting the unit, if it is then you need to identify which could be this and could be that and your reasons why. You can email me the full question if there is more to it.

    snowmarauder_whitmore@hotmail.com

    Best Regards Karen
  • crispy
    crispy Registered Posts: 466 Dedicated contributor 🦉
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    Hi,

    You can use the high/low method to identify the fixed/variable elements eg.

    Direct Cost:
    High 2,000.....£ 300,000
    Low (1,000)....£ (200,000)
    .......1,000......£ 100,000

    £ 100,000/1,000 = £100 Variable

    £ 300,000 - (2,000 * £100) = £ 100,000 Fixed

    Indirect Labour:
    High 2,000......£ 90,000
    Low (1,000)...£ (65,000)
    .......1,000......£ 25,000

    £ 25,000/1,000 = £ 25 Variable

    £ 90,000 - (2,000 * £25) = £ 40,000 Fixed

    The other two are obviously fixed as when output increases their value remains the same.

    Hope this helps
  • kerryhill100
    kerryhill100 Registered Posts: 121 Dedicated contributor 🦉
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    thank you so much!!

    yes the high low method I think was what I was after but just obviously sink into my head when I read the text book lol

    I now have what appears to be the correct answer!!

    Sorry for being a bit blonde!!

    xxx

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