Write a Linear Cost Function Equation for Each of the Following

question 190

Essay

Write a linear cost function equation for each of the following conditions.Use y for estimated costs and X for activity of the cost driver.a.Direct manufacturing labour is $20 per hour.
b.Direct materials cost $8.00 per cubic metre.
c.Utilities have a minimum charge of $2,000 plus a charge of $0.05 per kilowatt hour.
d.Factory supplies average $10 per day plus $1.00 for each machine-hour per day.
e.Total manufacturing amortization includes $5,000 for straight-line plant amortization plus machinery amortization of $100 for each day operated.

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Definitions:

Accrual Basis

An accounting method that records revenues and expenses when they are earned or incurred, regardless of when the cash transaction happens.

Revenue Recognition

The accounting principle that determines the specific conditions under which revenue is recognized and recorded in the financial statements.

Revaluation Surplus

An increase in the value of an asset that is reflected in the books of accounts, primarily through a revaluation process.

Cash-Basis Expenses

Expenses recorded when cash is actually paid out, under the cash basis of accounting, as opposed to the accrual basis which recognizes expenses when they are incurred.