Please help with assessment 2 task 5c on the energy calculations

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.

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!

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.