Question 1

A data center tracks its electricity costs against the number of servers running. 
In March (highest activity), 8,000 servers were running, and total electricity cost was $45,000.
In June (lowest activity), 5,000 servers were running, and total electricity cost was $33,000.

Using the high-low method, calculate the variable electricity cost per server. (Enter number only, no commas or symbols)

Accepted Answer

Variable cost per unit = (Highest Cost - Lowest Cost) / (Highest Activity - Lowest Activity).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Dividing the highest cost by the highest activity ($45,000 / 8,000 = $5.625), which ignores fixed costs.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 1

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