The management of Casablanca Manufacturing Corporation believes that machine-hours is an appropriate measure of activity for overhead cost. Shown below are machine-hours and total overhead costs for the past six months: Assume that the relevant range includes all of the activity levels mentioned in this problem.What is Casablanca's independent variable?

Question

The management of Casablanca Manufacturing Corporation believes that machine-hours is an appropriate measure of activity for overhead cost. Shown below are machine-hours and total overhead costs for the past six months:  Assume that the relevant range includes all of the activity levels mentioned in this problem.What is Casablanca's independent variable?

Quizplus · Accepted Answer

The independent variable is the activity level that drives the changes in total overhead costs. In this case, machine-hours is the most appropriate measure of activity and therefore the independent variable. The other answer choices (year, total overhead cost, relevant range) are not independent variables that drive changes in overhead costs.

The Management of Casablanca Manufacturing Corporation Believes That Machine-Hours Is