At the High Level of Activity in November 7000 Machine

question 116

Multiple Choice

At the high level of activity in November 7000 machine hours were run and power costs were $18000. In April a month of low activity 2000 machine hours were run and power costs amounted to $9000. Using the high-low method the estimated fixed cost element of power costs is

• A) $18000.
• B) $9000.
• C) $5400.
• D) $12600.

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Definitions:

Insured's Interest

The stake or financial interest that an insured person has in the safety and preservation of the covered object against loss or damage.

Fire Insurance Policy

A contract between an insurer and policyholder that provides coverage against fire damage to property or goods.

Transferring Risk

The act of shifting the potential for loss or damage from one party to another, often achieved through insurance contracts or hedging.

Shifting Liability

The act of transferring the responsibility for a loss or damage from one party to another.