Maintenance Expenses of a Company Are to Be Analyzed for Purposes

question 34

Multiple Choice

Maintenance expenses of a company are to be analyzed for purposes of constructing a flexible budget. Examination of past records disclosed the following costs and volume measures: $\begin{array}{lrr} & \text { Highest } & \text { Lowest } \\\text { Cost per month } & \$ 86,000 & \$ 74,000 \\\text { Machine hours } & 96,000 & 66,000\end{array}$ Using the high-low-point method of analysis, the estimated variable cost per machine hour is:

• A) $0.40
• B) $0.20
• C) $0.90
• D) $0.10
• E) $0.70

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Definitions:

Bargain Brand Noodles

Low-cost noodle brands that offer savings compared to mainstream or premium brands without compromising much on quality.

Responsiveness

The ability of a system or organization to react quickly and positively to changes or requests.

Quantity

The amount or number of a material or immaterial good that is considered disposable or usable.

Income Elasticity of Demand

Income elasticity of demand measures how the quantity demanded of a good or service changes in response to a change in consumers' income.