The Following Data Relate to the Lisle Company for May

question 27

Multiple Choice

The following data relate to the Lisle Company for May and August of the current year:
May and August were the lowest and highest activity levels,and Lisle uses the high-low method to analyze cost behavior.Which of the following statements is true?

• A)The variable maintenance cost is $43 per hour.
• B)The variable maintenance cost is $45 per hour.
• C)The variable maintenance cost is $47 per hour.
• D)The fixed maintenance cost is $725,000 per month.
• E)More than one of the above statements is truE.

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Definitions:

Uncollectible Accounts

Accounts receivable that a company does not expect to collect and thus considers as a loss.

Effective Interest Rate

The real rate of interest earned or paid on an investment, loan, or other financial product adjusted for compounding over a given period.

Present Value

The value today of a future cash amount or series of payments, based on a particular rate of return.

Fair Value

The value received from selling an asset or the expense of transferring a liability in a regulated transaction among market players on the date of evaluation.