Question

A 1. For purposes of budgeting in the short run, the variable cost function is 'assumed to be linear. This assumption is called: the relevant range' assumption b. the 'linear budgeting' assumption c. the 'variable costing' assumption 2. Which of the following components of factory overhead would most likely be considered a variable cost: straight-line depreciation on factory equipment indirect labor wages paid to the factory maintenance crew c. Indirect materials used in production the cost of factory rent 3. The slope of a linear variable cost function represents: the rate at which the cost is rising per unit change in volume. b. the cost that the company will have if no units are produced. c. the rate at which the number of units that are being produced is rising. 4. The two points used to find the slope of a budget line using the scattergraph method' are the points at which volume is highest and lowest. a. True b. False 5. Of the three methods for finding the formula to budget a mixed cost--scattergraph, "high-low', and linear regression--the scattergraph method is the most accurate. a. True b. False 6. In applying the equation for a straight line, y=mx+b', to our application of budgeting a mixed cost, the letter's represents: Và the dollar amount at the y-intercept (fixed cost) b. the variable cost per unit c. the volume, in units d. the total cost at a given volume The following data applies to questions 7 and 8: Jones Co. had the following data for units produced and maintenance costs in each of the four quarters of their fiscal year: QUARTER 1: 48 units and $110 QUARTER 2: 56 units and $129 QUARTER 3:44 units and $105 QUARTER 4: 54 units and S119 7. Using the High-Low Method, the slope of the budget line would be $1.50 $2.00 c. $2.25

Answer 1

In case of multiple questions being asked, as a rule, only One (1) question can be answered at a time. Further, if no specific question is requested (maximum of 1), the first question is itself only answered.
Kindly post the rest of the questions, individually separately.

Q1. For the purpose of budgeting in the short run, the variable cost function is 'assumed' to be linear. This assumption is called:

Appropriate response: (a) The 'relevant range' assumption

Justification: Linear means 'nearly a straight line'.
In examination of the relevant range graph, it can be clearly observed that 'a straight line closely approximates a curvilinear variable cost line within the relevant range'.
That means, in the relevant range of activity, the variable costs depict a linear behavior. Thus implying that in this relevant range of activity, the variable costs per unit will remain constant.

Ruling out of other options:
(b) Linear budgeting assumption: this assumption implies that 'a specific amount of change in one value causes a specific amount of change in the other'. This assumption establishes a linear relationship between cost-variable relationship. It does not assume that the variable cost function is in itself linear. Therefore, not the right response.

(c) Variable costing assumption: This assumption requires that all variable costs be considered in product costing process, but all fixed costs be reported as period costs. Therefore, It does not assume that the variable cost function is in itself linear. Therefore, not the right response.