C-Drive Components Has Collected the Following Production Data for the Past

question 89

Multiple Choice

C-Drive Components has collected the following production data for the past four months: $\begin{array}{cr}\text { Units produced } & \text { Total cost } \\ 7,000 & \$ 16,500 \\10,000 & 22,500 \\8,500 & 17,750 \\9,000 & 21,000\end{array}$ If the high-low method is used, what is the monthly total cost equation?

• A)Total cost = $2,500 + ($2.00 × units produced)
• B)Total cost = $3,750 + ($2.75 × units produced)
• C)Total cost = $1,500 + ($2.00 × units produced)
• D)Total cost = $500 + ($2.25 × units produced)

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Definitions:

Indirect Expenses

Costs that are not directly attributable to a specific product or service but are necessary for the operation of a business, such as utilities or rent.

Gross Profit Ratio

Gross profit ratio is a financial metric that represents the proportion of money left over from revenues after accounting for the cost of goods sold.

Wage Expenses

The total cost incurred by a company for the payment of wages to its employees.

Indirect Expenses

Costs that are not directly traceable to a specific cost object, such as the production of goods or services.