The Maintenance Expenses of a Company Are to Be Analyzed

question 109

Multiple Choice

The 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: Highest and Lowest: Cost per month $20,000 and $14,000;Machine hours 55,000 and 35,000.
Using the high-low-point method of analysis,the estimated variable cost per machine hour is:

• A)$0.40
• B)$0.25
• C)$0.30
• D)$0.35
• E)$0.70

---

Definitions:

Term to Maturity

The remaining time until a financial instrument's principal amount is due to be repaid.

Net Basis

A method of reporting income and expenses where they are netted against each other, showing only the net amount instead of reporting them separately.

Cash Receipts

Money received by a business, typically documented during the accounting period in which it is received.

Turnover Quick

A measure reflecting the speed at which a company can convert its inventory or assets into sales or revenue, indicating operational efficiency.