Given that the difference in costs between the highest and lowest values of a cost driver is $8,000, and the difference in the cost driver itself is 40 machine hours, what is the value of the slope coefficient?

Multiple choice question for Cost Function and Behavior. Select an option, then review the explanation below.

Explanation

The slope coefficient is calculated by dividing the change in cost by the change in the cost driver. Here, $8,000 divided by 40 machine hours equals $200 per machine hour.

Practice related questions from the same subject.

1.How is the connection between specific cost elements and their cost drivers characterized within a dependent variable cost pool?
2.Which technique uses the minimum and maximum values of the cost driver and associated costs within the relevant range to estimate costs?
3.Given that the unexplained variation is 350,050 and the total variation amounts to 700,505, what is the coefficient of determination?
4.What term describes the scenario where multiple independent variables exhibit a strong correlation with each other?
5.In regression analysis, given an actual cost of 85 and an error term of 25, what is the predicted cost value?

Given that the difference in costs between the highest and lowest values of a cost driver is $8,000, and the difference in the cost driver itself is 40 machine hours, what is the value of the slope coefficient?

Explanation

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