Please see the images attached. Attachment 462209462211
1. How was the sales revenue calculated
2. The fixed cost was worked out as £2500 but in the table is it £3500, why?
3. What's the difference between fixed element and fixed cost.
4. How was the profit per batch calculated?
Note: fixed cost and variable cost were correctly calculated using the high low method.
Thanks in advance
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- Thread Starter
- 17-09-2015 11:22
- 07-10-2015 19:36
Probably already solved this but just to help anyone else.
1) The sales revenue for the next two questions worked out by the following £25,000 / 1000 units to get the price they're selling the units at (£25). They then did £25 x 1,500units for the second column and £25 x 2,000 units for the final one.
2) You seem to be getting a bit confused there are four different types of costs, Variable, Fixed, Semi-Variable and Stepped. The semi- variable's fixed portion is £2,500 however the £3,500 is a completely different cost which is a fixed one, they're not related at all.
3)A fixed cost is a different type of costing so in this question the fixed cost is £3,500 an example of this would be paying for your rent on a property is a fixed cost as it remains the same no matter how many units you produce. A fixed element is a part of your semi-variable which is made up of a variable portion and fixed portion.
4)The profit per batch was calculated by taking your profit which was £6,000 and dividing it by the number of units produced which were 1,000 (6000/1000=6). The profit was calculated in the beginning by taking your sales revenue and taking away your total cost.
Kinda late but oh wells.