To Estimate the Unit Variable Cost Using the High-Low Method

question 117

True/False

To estimate the unit variable cost using the high-low method, identify the highest and lowest level of activity and compute the slope of the line.

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Definitions:

Nickels

A five-cent coin made by the United States Mint.

Quarters

In financial and business terms, one of the four three-month periods into which the fiscal year is divided for reporting and forecasting purposes.

Marginal Rate

The rate at which something changes with each additional unit, such as the marginal tax rate, which is the rate applied to each additional dollar of income.

Substitution

The economic principle where consumers replace more expensive items with less costly alternatives.