04-02-2011, 12:10 AM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by basit_namdar</i>
<br />Ok assuming the variable cost increases at the same rate as revenue i.e. The variable cost per unit remains same than
45000/75000 = 0.6
This means that for each 1 pound sales we incur 0.6 variable cost. Therefore for 105000 sales we will incur 63000 variable cost. This means an excess of 18000 will be incurred for excess sales of 40000 ( 63000-45000 ).
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
The question in my book given the sales = 75 000, variable cost = 45 000, fixed cost = 25 000, profit = 5 000. Then the sales increased 40 000. The answer for variable cost is 80 000. How to get the answer?
<br />Ok assuming the variable cost increases at the same rate as revenue i.e. The variable cost per unit remains same than
45000/75000 = 0.6
This means that for each 1 pound sales we incur 0.6 variable cost. Therefore for 105000 sales we will incur 63000 variable cost. This means an excess of 18000 will be incurred for excess sales of 40000 ( 63000-45000 ).
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
The question in my book given the sales = 75 000, variable cost = 45 000, fixed cost = 25 000, profit = 5 000. Then the sales increased 40 000. The answer for variable cost is 80 000. How to get the answer?
