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QUESTION 3: 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

QUESTION 3:

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 fixed costs when the activity exceeds 20,000 units.

What are the total costs at an activity level of 18,000 units? (show your working)

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