If 500 Units of Supplies Are Consumed When Output Is

question 22

Multiple Choice

If 500 units of supplies are consumed when output is at its high of 200, and 300 supply units are consumed during the low month when 150 units of output were produced, what will be the predicted supply expense if output is 175 and the average supply cost is $12 per unit using the high/low method?

• A) $4200
• B) $4500
• C) $4800
• D) $5400
• E) None of the above

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Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company’s assets, liabilities, and equity at a specific point in time.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.

Acid-test Ratio

A financial metric used to evaluate a company's short-term liquidity position by comparing its most liquid assets (excluding inventory) to its current liabilities.

Standards for Comparison

Benchmarks or criteria used to evaluate the performance, condition, or quality of something.