Question 1

A logistics company recorded the following maintenance costs and activity levels over the last four months:
Month 1: 12,000 miles, $45,000
Month 2: 15,000 miles, $51,000
Month 3: 10,000 miles, $41,000
Month 4: 18,000 miles, $57,000

Using the high-low method, calculate the variable maintenance cost per mile. (Enter the number only, to two decimal places, e.g., 1.50)

Accepted Answer

Identify the highest and lowest activity levels (miles). High: 18,000 miles ($57,000). Low: 10,000 miles ($41,000). Variable cost per unit = Change in cost / Change in activity.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Using the highest and lowest costs instead of highest and lowest activity levels (though they align here, it's a bad habit).

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 2

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