Cardinal Uses the High-Low Method of Estimating Costs

question 30

Multiple Choice

Cardinal uses the high-low method of estimating costs.Cardinal had total costs of $25,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 10,000 units,total costs were $39,000.Cardinal would estimate variable cost per unit as:

• A)$7.00
• B)$4.55
• C)$2.80
• D)$5.26

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Definitions:

Capital Balances

The amount of capital that remains in a business after all liabilities have been subtracted from assets and capital contributions.

Remaining Capital Balances

The portion of a company's capital that remains after accounting for expenses, withdrawals, and any losses.

Income Ratios

Financial metrics that assess a company's ability to generate profit relative to its revenue, operating costs, or other financial metrics over a specific period.

Liquidation Process

The procedure through which a company's assets are sold off to pay creditors and close the business, often occurring during bankruptcy proceedings.