Larker Brothers,Inc

question 77

Multiple Choice

Larker Brothers,Inc.,used the high-low method to derive its cost formula for electrical power cost.According to the cost formula,the variable cost per unit of activity is $4 per machine-hour.Total electrical power cost at the high level of activity was $19,200 and at the low level of activity was $18,400.If the high level of activity was 3,300 machine hours,then the low level of activity was:

• A) 3,100 machine hours
• B) 3,200 machine hours
• C) 3,000 machine hours
• D) 2,900 machine hours

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Definitions:

Contribution Margin Mix

The relative proportion of different products or services, contributing to the total contribution margin, highlighting how combination effects overall profitability.

Break-Even Point

The point at which total costs and total revenue are equal, meaning there is no net loss or gain, and one has 'broken even'.

Unit Contribution Margins

The difference between the selling price per unit and variable cost per unit, indicating the contribution of each unit sold to covering fixed costs.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a certain range or period.