Please help with assessment 2 task 5c on the energy calculations
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Fifi10
Registered Posts: 3 New contributor 🐸
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You will need to use the high low method using the figures from the first and second draft.
That way you can work out your fixed and variable cost per unit, then apply it to the number of units for the third draft.1 -
I'm stuck again can you please work it out0
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Hi,
The energy cost is a semi-variable. You have to work out fixed and variable elements of the cost using the information from the first and second drafts. You have to use high/low method for your calculations. Hope that helps!0 -
Can someone please work out the question because I tried doing what you said and I'm getting a different answer, i need workings0
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High - Low
(Cost high - Cost Low)/(Number high - Number low) = Variable cost
(33250-31450)/ (250000-210000) = 1800/40000 = 0.045
Total cost = Variable + fixed
@250,000 units
33250 = 0.045*250000 + Fixed
Fixed = 33250-11250 =£22,000
Check with 210,000
22,000 + 0.045*210000 = 31450
Third Draft
Cost = 22,000 + 0.045*225000 = 32,125
Alternative method (Not high/low)
(225,000-210,000)/(250000-210,000) = 0.375 = Amount along line as decimal
Cost = 31450 + ((33250-31450)*0.375) = 31450 +675 = 32,125
The second method can save time but I wouldn't use it unless you understand it. It takes the same assumption as the high/low method and applies it differently.AAT Level 4, MAAT
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