A High-Low Approach to Establishing Fixed and Variable Components of Costs

question 33

Multiple Choice

A high-low approach to establishing fixed and variable components of costs is most effective when information available is

• A)curvilinear.
• B)erratic and highly fluctuating.
• C)outside of the relevant range.
• D)linear.

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Definitions:

Calendar-Year

A one-year period that begins on January 1 and ends on December 31, based on the Gregorian calendar, commonly used for financial and administrative purposes.

Revenue

The total amount of money generated by a company from its business activities, such as sales of goods or services, before any expenses are deducted.

Salaries Payable

A liability account that records the amounts of wages earned by employees that have not yet been paid to them.

Salaries Expense

An accounting item that represents the total amount paid to employees in the form of salaries over a specific period of time.