Spokane Corporation Found Its Maintenance Cost and Sales Dollars to Be

question 126

Multiple Choice

Spokane Corporation found its maintenance cost and sales dollars to be somewhat correlated. Last year's high and low observations were as follows: $$\begin{array} { c c } \text { Maintenance Cost } & \text { Sales } \\\$ \$ 46,000 & \$ 600,000 \\\$ 52,000 & \$ 800,000\end{array}$$ What is the fixed portion of the maintenance cost?

• A)$28,000
• B)$52,000
• C)$60,000
• D)$14,000

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Definitions:

Non-Interest-Bearing Note

A financial instrument that does not accrue interest over its life, promising to pay the principal amount at maturity.

U.S. Dollar Equivalent

The value of a foreign currency expressed in terms of the amount of U.S. dollars it can be exchanged for.

Put Option

A financial derivative that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time frame.