Use the Following to Answer Question

question 21

Multiple Choice

Use the following to answer question:
Figure 5.6
-(Figure 5.6) Garth spends his income on ice cream and coffee, and coffee sells for $1 a cup. If ice cream sells for $1.50 per gallon, Garth will purchase:

• A) 2 gallons.
• B) 8 gallons.
• C) 1 gallon.
• D) 6 gallons.

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Definitions:

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behavior are valid.

High-low Method

A way to estimate the cost-behavior formula that uses the highest and lowest levels of activity to determine fixed and variable costs.

Activity Index

A measure or indicator used to gauge activity levels within a particular domain, such as manufacturing or stock trading volume.

Process Cost System

A cost accounting system used when a company manufactures a large volume of similar products.