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Tricia_Ng
Nov 23, 2010, 10:51 PM
do you know how to solve this question?
An organisation has the following total costs at two activity levels:

Activity level (units) 15,000 24,000
Total costs $380,000 $470,000

Variable cost per unit is constant in this activity range but there is a step up of $18,000 in the total costs when the activity exceeds 20,000 units.

What are the total costs at an activity level of 18,000 units?

jaynelin
Jan 16, 2011, 01:08 AM
VCPU=($470,000-$180,000)-$380,000 / 24000 - 15000 units
=$8/unit
FC=$380,000-($8*15000 units)
=$260,000
TC@18000 units=$260,000+($8*18000 units)
=$404,000