Narrative 5-1
The following question(s)refer to the this equation analyzing the relationship of total cost to changes in machine hours.The following relationship was determined:
TC = $2,200 + $3X
Refer to Narrative 5-1.The $3 in the above equation is an estimate of which of the following?
A)total fixed costs.
B)variable costs per machine hour.
C)total variable costs.
D)fixed costs per machine hour.

Question

Quizplus · Accepted Answer

The $3 in the equation represents the variable costs per machine hour. This is because the equation is in the form of y = mx + b, where m represents the slope or the change in y over the change in x. In this case, x represents the number of machine hours which is the only variable factor affecting the total costs (TC). The fixed costs are represented by the y-intercept (b), which is $2,200 in this equation. Therefore, the correct answer is B – variable costs per machine hour.

Narrative 5-1 The Following Question(s)refer to the This Equation Analyzing the Relationship