Can anyone please help me with this question regarding total cost and cost per unit!

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gianlucapensotti
gianlucapensotti Registered Posts: 12
in Elements of Costing
Please could someone explain on how to work out the second part of the question regarding calculating the total cost and cost per unit when it comes to 50,000 and 40,000 units.
I have attached both parts of the question for reference, I am fine with the top part (average cost) but am unsure about the second half.

Many thanks :)

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  • dumutroba
    dumutroba Registered Posts: 262
    edited January 2019
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    Why unsure, the answer is given
    For the direct materials cist you have been told to use the figure of £36000, therefore
    36000+42000+54000=132000 total cost
    Divide that figure by the number of units 50000 and you will get cost per unit

    For the 40000units
    Variable cost we find by dividing the £36000 by the number of units 50000=0.72 per unit
    0.72x40000 units=28800
    Same is done for labour
    Fixed cost of 54000 is 54000, because it is fixed

    Note to remember
    Variable cost is fixed per unit, and fixed costs remain fixed in total
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  • gianlucapensotti
    gianlucapensotti Registered Posts: 12
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    What about for 40,000 units, how would you work out that section because there is nothing given?

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