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

---

Definitions:

Point Price Elasticity

A measure of how responsive the quantity demanded of a good is to a change in its price at a specific point on the demand curve.

Artichokes

A variety of thistle cultivated for its edible flower buds.

Toll Increase

A raise in the charges levied on travelers for using a particular stretch of road, bridge, or tunnel.

Point Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in its price at a specific point on the demand curve.