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- 1 Marks
Question
The following data were extracted from UVW Limited for a single product V: Activity (units) Total Cost (N) 144,000 3,624,000 842,000 12,000,000 Calculate the value of fixed cost.
A. N8,376,000
B. N6,200,000
C. N3,264,000
D. N1,896,500
E. N1,896,000
Answer
Answer: E. N1,896,000
Explanation: The fixed cost is calculated using the high-low method to determine the variable and fixed components. The variable cost per unit is first identified by dividing the difference in total costs by the difference in activity levels. Once the variable cost is known, it is used to determine the fixed cost by subtracting the total variable cost from the total cost at either activity level.
- Tags: Costing Techniques, Fixed Costs, Marginal Costing, Total Cost
- Level: Level 1
- Topic: Costing Techniques
- Series: MAY 2024
- Uploader: Dotse