In Applying the High-Low Method What Is the Fixed Cost

question 19

Multiple Choice

In applying the high-low method what is the fixed cost? $\begin{array}{ccc} \text { Month } & \text { Miles } & \text { Total Cost } \\\text { January } & 80,000 & \$ 192,000 \\ \text { February } & 50,000 & 160,000 \\ \text { March } & 70,000 & 188,000 \\ \text { April } & 90,000 & 260,000 \\\end{array}$

• A) $35000
• B) $72000
• C) $28000
• D) $100000

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Definitions:

Deferred

A term referring to items or expenses that are not recognized immediately but postponed to a future date.

Absorption Costing

This approach to accounting incorporates all costs associated with manufacturing such as direct materials, direct labor, and variable as well as fixed overhead expenses into the price of a product.

Operations

Refers to the day-to-day activities involved in running a business that lead to the production of goods and provision of services.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in product costs.