When the difference in costs between the highest and lowest cost driver observations is $8000, and the cost driver observation is 40 machine hours, the slope coefficient will be _____________?
Show answer Hide answer
Answer: B. $200
Explanation
Slope coefficient is determined by dividing cost difference by cost driver difference. Dividing eight thousand dollars by forty machine hours gives two hundred dollars per hour. This regression parameter measures the variable cost per unit of the cost driver. Cost estimation methods use the high-low method to separate mixed costs into components. Slope coefficient represents the variable cost rate associated with the cost driver. Cost drivers are activities that cause total costs to change over time.
Cost accountants use slope coefficients to forecast future overhead expenses accurately. Management relies on mixed cost separation for budgeting and cost control purposes. Understanding cost behavior helps businesses make better operational pricing decisions. Option A overstates the slope coefficient by multiplying instead of dividing. Option C suggests a higher cost rate not supported by the given data inputs. Option D represents an extreme figure unrelated to the high-low calculation.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
Related questions
Q1. When unit demand is 18000, the annual relevant ordering cost is $150 per order, and the order quantity is 1500, the annual relevant ordering cost would be __________?
Show answer Hide answer
Answer: D. $180
Annual relevant ordering cost divides annual demand by order quantity, multiplied by cost. Dividing eighteen thousand by fifteen thousand units, then multiplying by one hundred fifty, gives one hundred eighty dollars. Th...
Q2. Given a flexible budget amount of $27000 and a flexible budget variance of $12000, the actual result amount would be _____________?
Show answer Hide answer
Answer: C. $39,000
Actual result amount is the sum of the flexible budget amount and flexible variance. Adding twenty-seven thousand dollars and twelve thousand dollars gives thirty-nine thousand dollars. This calculation determines the tr...
Q3. With a fixed cost of $10000, a target operating income of $8000, and a per-unit contribution margin of $900, the required units to be sold will be ____________?
Show answer Hide answer
Answer: C. 20 units
Required units equal fixed costs plus target operating income, divided by unit contribution. Summing ten thousand and eight thousand, then dividing by nine hundred, yields twenty units. This calculation determines the ex...
Q4. If fixed costs are $20000, target operating income is $10000, and the unit contribution margin is $1200, the required units to be sold will be __________?
Show answer Hide answer
Answer: D. 25 units
Required units equal fixed costs plus target income, divided by unit contribution. Summing twenty thousand and ten thousand, then dividing by twelve hundred, gives twenty-five units. This formula calculates the exact sal...
Q5. Under variable costing, if the inventory level falls, the reported operating income will be ___________?
Show answer Hide answer
Answer: A. more
Under variable costing, falling inventory means production is less than sales volume. Lower production causes previously deferred fixed overhead to be released to the income statement. Releasing prior period fixed costs...
Q6. With current assets of $250000 and current liabilities of $135500, the working capital would be ___________?
Show answer Hide answer
Answer: D. $114,500
Working capital is calculated by subtracting current liabilities from current assets. Subtracting one hundred thirty-five thousand five hundred from two hundred fifty thousand gives one hundred fourteen thousand five hun...