Question

In the cost formula (Y = a + bX) that is used to estimate the total manufacturing overhead cost for a given period, the letter "a" refers to the estimated

Answer 1

a = Total Fixed Cost

Step-by-step explanation:

Total Cost is the total expenditure incurred on production of goods & services.

Total Cost can be segmented into : Fixed Cost - on fixed factors (eg plant), not varying with level of output and Variable Cost - on variable factors (eg raw materials), directly varying with level of output.

In Total Cost Function : Y = a + bX ; a = Constant Fixed Cost , bX = Variable cost varying with level of output X.