Tallequah, Inc

question 86

Multiple Choice

Tallequah, Inc. uses the high-low method to analyze cost behavior. The company observed that at 20,000 machine hours of activity, total maintenance costs averaged $10.50 per hour. When activity jumped to 24,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $9.75. On the basis of this information, the company's fixed maintenance costs were:

• A) $24,000.
• B) $90,000.
• C) $210,000.
• D) $234,000.
• E) None of the answers is correct.

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Definitions:

Payment

The transfer of money or goods from one party to another in exchange for goods, services, or to fulfill a legal obligation.

ROG

Depending on context, can refer to Receipt of Goods, indicating the time when goods are received and payment obligations begin.

Outstanding Balance

The amount of debt, or loan, that has not yet been repaid. It can change daily due to interest and payments.

Invoice

A detailed bill showing goods sold or services provided, along with the amounts due for payment.