Intermediate: Analysis of costs into fixed and variable elements and break-even point calculation (a) The analysis of
Question:
Intermediate: Analysis of costs into fixed and variable elements and break-even point calculation
(a) ‘The analysis of total cost into its behavioural elements is essential for effective cost and management accounting.’
Required Comment on the statement above, illustrating your answer with examples of cost behaviour patterns.
(5 marks)
(b) The total costs incurred at various output levels, for a process operation in a factory, have been measured as follows:
Required:
Using the high-low method, analyse the costs of the process operation into fixed and variable components. (4 marks)
(c)Calculate, and comment upon, the break-even output level of the process operation in
(b) above, based upon the fixed and variable costs identified and assuming a selling price of £10.60 per unit.LO1
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