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25 April, 11:56

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

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  1. 25 April, 12:11
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    a = Total Fixed Cost

    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.
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