Alpert Corp

question 38

Multiple Choice

Alpert Corp. uses the high-low method to estimate how its costs vary with levels of production. For the year, its high production was 100,000 units in a day, at a cost of $900,000, and its low production was 25,000 units, at a cost of $525,000. The equation that best describes this relation is

• A) Cost = $5 × Volume
• B) Cost = $400,000 + $5 × Volume
• C) Cost = $100,000 + $6 × Volume
• D) Cost = $300,000 + $6 × Volume

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Definitions:

Beginning Inventory

The value of goods available for sale at the start of an accounting period, carried over from the end of the previous period.

Inventory Units

The individual items or products that are available for sale, in production, or in stock as part of a company's inventory.

Variable Costing

Variable costing is an accounting method that includes only variable production costs (materials, labor) in product costs, excluding fixed overhead.

Unit Product Cost

The total cost to produce one unit of product, including direct materials, direct labor, and allocated overhead costs.