Questions 44 and 45 Are Based on the Maintenance Expenses

question 79

Multiple Choice

Questions 44 and 45 are based on the maintenance expenses of a company,which are to be analyzed for purposes of constructing a flexible budget.Examination of past records disclosed the following costs and volume measures:
Using the high-low technique,estimate the annual fixed cost for maintenance expenditures:

• A)$447,360.
• B)$240,000.
• C)$230,400.
• D)$384,000. Fixed cost = ($39,200 x 12 months)- (24,000 x 12x $0.80)= $240,000

---

Definitions:

Market Value

The market's current rate for transactions involving an asset or service.

Bond

A fixed income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental, where the issuer owes the holders a debt and is obliged to pay interest and/or to repay the principal at a later date, termed maturity.

Maturity

The date on which a financial obligation or investment becomes due for payment or is to be repaid in full.

Coupon Rate

The yield paid by a fixed-income security; a fixed percentage of the par value of the bond, paid to the investor annually or semi-annually.