This objective test question contains a question type which will only appear in a computer-based exam, but this question provides valuable practice for all students whichever version of the exam they are taking. The budgeted electricity cost for a business is $30,000 based upon production of 1,000 units. However if 1,400 units were to be produced the budgeted cost rises to $31,600. Using the high/low approach what would be the budgeted electricity cost if 2,100 units were to be produced?
【参考答案及解析】
A high low method analysis will first of all split out the budgeted VC and FC: Units $ Cost High 1,400 31,600 Low 1,000 30,000 Increment 400 1,600 VC per unit is $1,600/400 = $4/u Substitution in high: TC = FC + VC TC = FC + (1,400 × 4) 31,600 = FC + 5,600 FC = $26,000 For 2,100 units, Fixed costs = $26,000 VC (2,100 × 4) = $8,400 Total = $34,400
A high low method analysis will first of all split out the budgeted VC and FC: Units $ Cost High 1,400 31,600 Low 1,000 30,000 Increment 400 1,600 VC per unit is $1,600/400 = $4/u Substitution in high: TC = FC + VC TC = FC + (1,400 × 4) 31,600 = FC + 5,600 FC = $26,000 For 2,100 units, Fixed costs = $26,000 VC (2,100 × 4) = $8,400 Total = $34,400