If a company's overhead cost equation is y = $9.90x + $120,014. The "x" is
A) total overhead costs.
B) total fixed costs.
C) the cost driver in units.
D) the variable costs.

Question

Quizplus · Accepted Answer

The variable "x" in the equation represents the cost driver in units, which is the measureable factor that causes the overhead costs to increase or decrease. Therefore, choice C is the correct answer. The other options are not accurate because the equation shows a fixed cost component of $120,014, which means that "y" is not the total overhead costs or variable costs. Additionally, "x" is not the total fixed costs because the equation includes a variable cost component of $9.90 per unit.

If a Company's Overhead Cost Equation Is Y = $9