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4 An organisation has the following total costs at two activity levels:

Activity level (units) 17,000 22,000

Total costs (£) 140,000 170,000

Variable cost per unit is constant in this range of activity and there is a step up of £5,000 in the total fixed costs when

activity exceeds 18,000 units.

What is the total cost at an activity level of 20,000 units?

A £155,000

B £158,000

C £160,000

D £163,000

 

C

c

TOP

155000

TOP

b

TOP

a

TOP

c

TOP

thx

TOP

c 160,000

(170,000-140,000-5,000)/(22,000-17,000)=25,000/5,000=5

140,000+5*(20,000-17,000)+5,000=140,000+15.000+5,000=160,000

TOP

C

TOP

c

TOP

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