What is the total cost at an activity of 2,000 units? An organisation - ProProfs Discuss
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What is the total cost at an activity of 2,000 units? An organisation has the following total costs at two activity levels. Activity Level (units) 16,000 22,000 Total Costs ($) 135,000 170,000. Variable cost per unit is constant within this range of activity but there is a step up of $5,000 in the total fixed costs when the activity exceeds 17,500 units.



A. $155,000
B. $158,000
C. $160,000
D. $163,000

This question is part of ACCA F2 Management Accounting
Asked by Natashanelesh, Last updated: Sep 16, 2020

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1 Answer

John Smith

John Smith

John Smith
John Smith

Answered Feb 24, 2017

$160,000

Variable Cost/Unit: [(170,000-5,000) - 135,000] / (22,000 - 16,000) = $5 Total Fixed Cost (below 17,000 units): [135,000 - (16,000 x 5)] = $ 55,000 Total Cost for 20,000 units: 55,000 + 5,000 + (20,000 x 5) = $160,000
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