Young's flexible-budget formula,where Y is defined as total cost and AH represents activity hours,is:
A)Y = $4.50AH + $24AH.
B)Y = $4.50AH + $720,000.
C)Y = $22.50AH.
D)Y = $180,000 + $18AH.
E)Y = $945,000.

Question

Quizplus · Accepted Answer

The flexible-budget formula typically includes a fixed cost component and a variable cost component per unit of activity. Option B represents this with $720,000 as the fixed cost and $4.50 per activity hour as the variable cost.

Young's Flexible-Budget Formula,where Y Is Defined as Total Cost and AH