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Binsey Ltd uses regression analysis to forecast future monthly costs. Using historic
information the accountant has produced the following equation which will be used
to predict future monthly costs:
TC = 4Q + 600
Where Q is the number of units produced each month.
Which of the following statements is correct?
A Variable costs = $600 per unit, Fixed costs = $400 per month
B Annual fixed costs = $48,000
C Annual fixed costs = $7,200
D Variable costs = $40 per unit, Fixed costs = $7,200 per month- Topics: 0
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- ☆☆
Rearrange the formula and make it total cost = 600 + 4Q (y = a + bx), 600 represents monthly fixed costs of $600, so annual fixed cost = $600 x 12 month = $7200 and answer is C 😀
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