In describing the cost formula equation Y = a + bx, which of the following statements is correct? A "a" is the fixed component

Accounting Nov 05, 2020

In describing the cost formula equation Y = a + bx, which of the following statements is correct? A "a" is the fixed component. B "X" is the dependent variable. As "X" increases "Y" decreases. D) In the high-low method, "b" equals change in activity divided by change in costs.

Expert Solution

Correct answer is D. In the high low method, 'b' equals change in activity divided by change in cost.

In the equation Y= a + bX

Y= Total cost

a= Fixed cost

b= variable cost per unit

X= no of units.

This equation given us Mixed cost.

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote