Burruss Company Developed a Static Budget at the Beginning of the Company's

question 12

Multiple Choice

Burruss Company developed a static budget at the beginning of the company's accounting period based on an expected volume of 8,000 units: $$\begin{array} { l c } & \text { Per Unit } \\\text { Revenue } & \$ 4.00 \\\text { Variable costs } & \underline{1.50} \\\text { Contribution margin } & \$ 2.50 \\\text { Fixed costs } & \underline{ 2.00} \\\text { Net incone } & \underline{\$ 0.50 }\\\end{array}$$ If actual production totals 10,000 units,which is within the relevant range,the flexible budget would show fixed costs of:

• A) $16,000.
• B) $2 per unit.
• C) $20,000.
• D) None of these answers are correct.

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Definitions:

Estimated Regression Equation

An equation derived from regression analysis that estimates the relationship between variables.

Independent Variable

A variable presumed to influence or determine the dependent variable in an experiment or study.

Coefficient of Determination

A statistical measure that determines the proportion of variance in the dependent variable that can be predicted from the independent variable(s).

Quadratic Model

A statistical or mathematical model in which the relationship between the independent variable and the dependent variable is represented by a second-degree polynomial or parabolic function.