Ajax Uses the High-Low Method of Estimating Costs

question 31

Multiple Choice

Ajax uses the high-low method of estimating costs.Ajax had total costs of $50,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 12,000 units,total costs were $78,000.Ajax would estimate fixed costs as:

• A)$28,000
• B)$30,000
• C)$64,000
• D)$128,000

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Definitions:

Opportunity Costs

The lost potential gain from other options when one option is chosen.

Nonmonetary Costs

Costs not easily quantified in monetary terms, including time, effort, and emotional investment made by consumers in association with a purchase.

Marketers

Professionals or organizations that engage in activities designed to identify, anticipate, and satisfy customer needs profitably.

Transactional Cost

The expenses incurred during a trade or deal, including costs of information, negotiation, and enforcement of contracts.