When the level of activity increases within the relevant range, how does each of the following...
When the level of activity increases within the relevant range, how does each of the following change?
| A. |
Variable Cost per Unit - Increases, Fixed Cost per Unit - Increases |
|
| B. |
Variable Cost per Unit - Decreases, Fixed Cost per Unit - Remains the same |
|
| C. |
Variable Cost per Unit - Remains the same, Fixed Cost per Unit - Decreases |
|
| D. |
Variable Cost per Unit - Remains the same, Fixed Cost per Unit - Increases |
The new cost analyst in your accounting department has just run a scatter graph on Excel with a trend-line for utility cost estimation. The graph shows an r-square factor of .9942. Based upon this, which of the following is true?
| A. |
There is a low correlation between machine hours and utilities cost |
|
| B. |
99.42% of utility cost is fixed |
|
| C. |
There is a high correlation between machine hours and utilities cost |
|
| D. |
Variable costs are $.9942 per machine hour |
Homework Answers
Answers :
1) C) Variable cost Per Unit - Remains the same, fixed cost per Unit -Decreases
2) C) Thee is a High correlation between MAchinehours and Utilities Cost
Within the relevant range of output ;
- Variable Cost Per Unit Remains the Same,
- The fixed cost Per Unit is decreasing when the Units are Increasing.
- Total Fixed cost Constant
- Total Variable cost Will increase with volume
R-Square is the Determination of the Square of the Correlation Co-efficient . it seems that there is a high degree of Correlation between the Machine hours and the Utility Cost.
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