The Following Data Relate to the Lisle Company for May

question 33

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 $18 per hour.
• B)The variable maintenance cost is $22 per hour.
• C)The variable maintenance cost is $24 per hour.
• D)The fixed maintenance cost is $72,000 per month.
• E)More than one of the above statements is truE.

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Definitions:

General Cost

A type of expense that is not directly tied to production or operations but is necessary for overall business function, like utilities or rent.

Prime Costs

The combined costs of direct materials and direct labor that are directly attributable to the manufacturing process.

Direct Materials

Materials that are directly consumed in the production of a product and are easily traceable to it.

Cost of Goods Sold

The immediate expenses related to the creation of products sold by a business, which include costs for materials and labor.