Sterling Glass Company Uses the High-Low Method to Analyze Mixed

question 47

Multiple Choice

Sterling Glass Company uses the high-low method to analyze mixed costs.The following information relates to the production data for the first six months of the year.
How should the cost function be properly stated?

• A)Y = $2,025 + $2.50H.
• B)Y = $3,890 + $2.00H.
• C)Y = $4,085 + $2.00H.
• D)Y = $5,260 + $2.50H. Unit variable cost = ($5,685 - $4,485)/(800 - 200)= $2.00.Fixed cost = $5,685 - (800 x $2.00)= $4,085 or $4,485 - (200 x $2.00)= $4,085

Analyze the impact of probabilities on expected outcomes and decisions.

Evaluate the rationality behind purchasing insurance and warranties despite the cost exceeding expected claims.

Identify how individual differences in risk aversion affect financial decisions and utility.

Understand the concept of a fair insurance policy and how it is determined.

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Definitions:

Bankruptcy Proceeding

A legal process through which individuals or entities unable to repay debts to creditors seek relief from some or all of their debts.

Bankruptcy Trustee

A person appointed by the court to manage the affairs, property, and assets of a bankrupt individual or business.

Bankruptcy Trustee

An individual appointed in a bankruptcy case to manage the debtor's estate, including the liquidation of assets to repay creditors.

Debtor's Estate

The total sum of a debtor's legal and equitable interests, assets, and liabilities at a specific time, often in the context of bankruptcy.