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Learning Activity 7 - Variable Fixed Costs

The document discusses calculating variable and fixed costs from payroll data over four quarters. It provides payroll hours and costs for each quarter, then calculates the variable cost per hour, fixed costs, and total variable costs expected for the next quarter based on an expected 23,000 work hours.

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Energy Trading QUEZELCO 1
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12 views3 pages

Learning Activity 7 - Variable Fixed Costs

The document discusses calculating variable and fixed costs from payroll data over four quarters. It provides payroll hours and costs for each quarter, then calculates the variable cost per hour, fixed costs, and total variable costs expected for the next quarter based on an expected 23,000 work hours.

Uploaded by

Energy Trading QUEZELCO 1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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JORDAN, REA MARIZ I.

MANAGEMENT ACCOUNTING & CONTROL


VARIABLE COSTING

Lesson Activity 7. Variable & Fixed Costs

Maricel is a management accountant in an organization. She has been


assigned the task of budgeting payroll costs for the next quarter.

Payroll information of the last 4 quarters is as follows:

Quarte Work Hours Cost in Php


r
1 15,000 400,000
2 20,000 480,000
3 18,000 440,000
4 21,000 500,000

The organization increments salaries and wages by 10% at the start of the
3rd quarter each year. Twenty-three thousand (23,000) hours are expected to be
worked in the first quarter of the next year.

Required: Calculate the following:


1. Variable Cost per Unit
2. Fixed Cost
3. Total Variable Costs
SOLUTION.
Highest working hours = 21,000 hrs (4th quarter)
Lowest working hours= 15,000 hrs (1st quarter)
Cost for the first quarter = P400,000
The inflated cost = P400,000 x 1.10 = P440,000

1. Variable Cost per Unit


Variable cost per unit = P500,000 - 440,000/21,000 hrs - 15,000 hrs
= P60,000/6,000 hrs
Variable cost per unit = P10 per hour

2. Fixed cost
TFC= TC-TVC
TVC= Highest working hrs x variable cost per unit
= 21,000 x P 10 =P 210,000
TVC= Lowest working hrs x variable cost per unit
=15,000 x P 10 =P 150,000
Work Hours Cost in Php TVC
Highest 21,000 P500,000 P210,000
Lowest 15,000 P 440,000 P150,000

Total Fixed Cost = Total Cost – Total Variable Cost


Highest
= P500,000-210,000
=P290,000

Lowest
=P440,000-150,000
=P290,000

3. Total Variable Costs = Work hours x variable cost per unit


= P23,000 x P10
= P 230,000

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