Question 1

**Section A**

TitaniumForge operates a heavy steel forging plant. The total electricity costs recorded at two different activity levels are as follows:

- Highest activity: 15,000 machine hours, Total Cost: $85,000
- Lowest activity: 8,000 machine hours, Total Cost: $57,000

Using the high-low method, calculate the estimated total electricity cost for an activity level of 12,000 machine hours.

*(Enter your answer as a whole number without the dollar sign or commas)*

Accepted Answer

1. Find variable cost per unit: (Highest Cost - Lowest Cost) / (Highest Activity - Lowest Activity).
2. Find fixed cost: Total Cost - (Variable Cost per unit * Activity level).
3. Calculate total cost for 12,000 hours: Fixed Cost + (Variable Cost per unit * 12,000).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Forgetting to add the fixed cost back when calculating the final total cost.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 6

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