Audio Zone Co

question 38

Multiple Choice

Audio Zone Co. needs to prepare pro forma financial statements for the next fiscal year. To do so, the company must forecast its total overhead cost. The actual machine hours and total overhead cost are presented below for the past six months.Using the high-low method, unit variable overhead cost is calculated to be:

• A) $1.40
• B) $1.50
• C) $1.60
• D) $1.70
• E) $1.80

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Definitions:

Consumer Surplus

Consumer surplus is the difference between the total amount that consumers are willing to pay for a good or service and the total amount they actually pay, indicating the benefit consumers receive from purchasing at a market price lower than their maximum willingness to pay.

Ice Cream Cones

Frozen dessert treats served in a conical wafer, typically made by filling the cone with scoops of ice cream from one or more flavors.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing a measure of consumer benefit.

Walmart

An American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores.