If a company's overhead cost equation is y = $8.80x + $120,020. The "x" is
A)the cost driver in units.
B)total fixed costs.
C)total overhead costs.
D)the variable costs.

Question

Quizplus · Accepted Answer

"x" represents the cost driver in units, which is the variable that is most likely to cause changes in the company's overhead costs. The fixed costs are represented by the constant term in the equation ($120,020), and total overhead costs are represented by the entire equation. The variable costs cannot be determined from this equation alone.

If a Company's Overhead Cost Equation Is Y = $8