Highland Rose Ltd Is Attempting to Develop the Cost Function

question 88

Multiple Choice

Highland Rose Ltd is attempting to develop the cost function for repair costs. The following past data are available: $$\begin{array} { c c } \underline{\text { Machine Hours }} &\underline{ \text { Repair Costs }} \\4,800 & \$ 6,385 \\3,400 & 4,585 \\4,000 & 5,285 \\5,900 & 7,085\end{array}$$ Using the high-low method, what is the variable repair cost per machine hour?

• A) $1.00
• B) $0.15
• C) $4.00
• D) $5.00

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Definitions:

Call Option

A Call Option is a financial contract that gives the holder the right, but not the obligation, to buy a specific amount of an asset at a predetermined price within a specified period.

Put Option

A financial deal that provides the holder the privilege, yet not the compulsion, to offload a specified quantity of a basic asset at a fixed rate within an established timeframe.

Underlying Asset

The financial instrument (such as stocks, bonds, commodities) upon which derivatives and other financial instruments are based.

Troy Ounces

A measurement unit traditionally utilized for the weight of precious metals, where one troy ounce equals about 31.1035 grams.