Question

A) y = $100,000 + 250X

Cost Driver Costs
High Level of Activity 2,000 $ 600,000 (2,000 * 300 = 600,000)
Low Level of Activity 1,000 $ 350,000 (1,000 * 350 = 350,000)
Difference 1,000 $ 250,000

Slope Coefficient = Difference between costs (Y) / Difference between Cost Driver (X)

250,000 / 1,000 = 250 = Slope Coefficient

Constant = Y - (Slope Coefficient * X) -> can choose high or low

600,000 - (250 * 2,000) = 100,000

b) $4,000,000

Helicopters: 10
Round-trips per helicopter: 1,200
Slope Coefficient = 250X
Constant = 100,000

Total Operating Cost of a Helicopter: 400,000 -> 100,000 + (250 * 1,200)

Estimating Operating Budget for the Fleet: 4,000,000 (400,000 * 10)

Answer 1

The subject of this question is Business, and it is at a High School level. The given information provides equations for calculating total cost and estimating the operating budget for a fleet. The equations involve a cost driver, slope coefficient, and constant values.

Step-by-step explanation:

The subject of this question is Business and it is at a High School level.

In the given information, the equation for calculating the total cost (y) is y = $100,000 + 250X. The slope coefficient is found by taking the difference in costs divided by the difference in the cost driver. In this case, the difference in costs is $250,000 and the difference in the cost driver is 1,000, so the slope coefficient is 250. The constant is found by subtracting the slope coefficient times the cost driver from the total cost. With the given information, the constant is $100,000.

To estimate the operating budget for a fleet with a total operating cost of $4,000,000, we can use the constant and slope coefficient from the equation. The total operating cost of a helicopter is found by adding the constant to the product of the slope coefficient and the number of round-trips per helicopter. With the given information, the total operating cost of a helicopter is $400,000. To estimate the operating budget for the fleet, we multiply the total operating cost of a helicopter by the number of helicopters in the fleet, which gives us $4,000,000.