Chi Corp Uses the High-Low Method to Estimate How Its Costs

question 99

Multiple Choice

Chi Corp. uses the high-low method to estimate how its costs vary with levels of production. For the year, its high production was 50,000 units in a day, at a cost of $1,000,000, and its low production was 30,000 units, at a cost of $700,000. Its fixed costs are

• A) Zero
• B) 100000
• C) 250000
• D) 400000

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Definitions:

Company's Earnings

Company's earnings refer to the profit a company makes after deducting all costs and expenses from its total revenue.

Interest

The cost of borrowing money or the return earned on investments, calculated as a percentage of the principal amount.

Accounting Methods

Accounting methods are the specific rules and procedures used by businesses to record and report their financial transactions.

Persuasively Argued

Effectively presented reasoning or argumentation that convincingly supports a particular position or point of view.