Using the High-Low Method, Company X Has Determined the Variable

question 9

Multiple Choice

Using the high-low method, Company X has determined the variable portion of its cost formula for electricity to be $2 per unit.For the month of July Company X estimates that total electricity cost will amount to $66,000 based on producing 30,000 units.The amount of fixed electricity cost estimated for July is:

• A)$0.
• B)$6,000.
• C)$18,000.
• D)$33,000.

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Definitions:

Financing Activities

Transactions that result in changes to the size and composition of the equity capital or borrowings of a company.

Acquiring Investments

The process of purchasing assets or securities with the expectation of generating income or profit.

Issuing Debt

The process by which a company borrows money through the sale of bonds or other financial instruments to finance its operations or projects.

Lending Money

The act of giving money to another party with the expectation that the money will be paid back, typically with interest.