English Corporation analyzed the relationship between total factory overhead and changes in direct labor hours.It found the following:
Y = $6,000 + $6X
The Y in the equation is an estimate of
A) total variable costs.
B) total direct labor hours.
C) total factory overhead.
D) total fixed costs.

Question

Quizplus · Accepted Answer

The equation Y = $6,000 + $6X is an estimate of total factory overhead, as it shows the relationship between total factory overhead (Y) and changes in direct labor hours (X). The $6 per direct labor hour rate indicates the variable cost per hour of labor, but the $6,000 fixed amount represents the fixed costs of the factory overhead. Therefore, the best choice is C, total factory overhead.

English Corporation Analyzed the Relationship Between Total Factory Overhead and Changes