Microdash Company Uses the High-Low Method to Analyze Mixed Costs

question 84

Multiple Choice

Microdash 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 = $1,025 + $1.24H.
• B)Y = $875 + $1.15H.
• C)Y = $8,542 + $0.145H.
• D)Y = $9,263 + $0.162H. Using March and May.Unit variable cost = ($9,500 - $7,200)/(7,500 - 5,500)= $1.15.Fixed cost = $9,500 - (7,500 x $1.15)= $875.= $7,200 - (5,500 x $1.15)= $875

---

Definitions:

Quick Ratio

A financial metric that measures a company's ability to meet short-term obligations with its most liquid assets, excluding inventory.

Evaluation Of Liquidity

The process of assessing a company's ability to meet its short-term obligations using its current assets.

Current Obligations

Debts or financial commitments that are due to be settled within one year or within the normal operating cycle of the business.

Times Interest Earned Ratio

Operating income divided by interest expense.