Zurbrigg Copy Solutions Presently Leases a Copy Machine Under an Agreement

question 7

Multiple Choice

Zurbrigg Copy Solutions presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each copy made. Zurbrigg made 9,000 copies and paid a total of $560 in July; in November, the firm paid $480 for 7,000 copies. The company uses the high-low method to analyze costs. Zurbrigg's monthly fixed fee is:

• A)$200.
• B)$461.
• C)$480.
• D)$515.
• E)$560

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Definitions:

Guaranteed Residual Value

Guaranteed Residual Value is an assurance that the value of an asset at the end of its lease term will be at least a specified amount.

Maintenance Agreement

A contract between a service provider and a client that outlines the terms for the maintenance of equipment, buildings, or software.

Implicit Lease Rate

The interest rate implied in a lease agreement, factoring both the lease payments and the value of the leased asset.

Residual Value Guarantees

Assurances provided by a lessee to a lessor that the asset being leased will have a specified minimum value at the end of the lease term.