In Describing the Cost Formula Equation, Y = a

question 123

Multiple Choice

In describing the cost formula equation, Y = a + bX, which of the following is correct:

• A) "Y" is the independent variable.
• B) "a" is the variable cost per unit.
• C) "a" and "b" are valid for all levels of activity.
• D) in the high-low method, "b" equals the change in cost divided by the change in activity.

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.

Scenario Analysis

This method involves evaluating potential future scenarios to understand how varying conditions can influence business operations or investment outcomes.

Best-case Scenario

The optimal or most favorable outcome that can be expected under certain conditions.

Worst-case Scenario

The most severe potential outcome for a situation, often used in risk management and planning.