Using the High-Low Method of Analysis,the Estimated Fixed Cost Per

question 57

Multiple Choice

Using the high-low method of analysis,the estimated fixed cost per month for electricity is closest to?

• A) $870.00.
• B) $1,150.00.
• C) $1,290.00.
• D) $1,306.50.

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Definitions:

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific activities, helping to more accurately determine the cost of products and services.

Departmental Overhead Rates

The allocation of indirect costs to specific departments based on relevant cost drivers or bases.

Plantwide Rate

A single overhead absorption rate used throughout an entire factory or plant, applied uniformly to all cost objects irrespective of the department in which they were created.

Budgeted Activity Rate

The estimated overhead rate used for budgeting, calculated based on anticipated levels of activity.