Maintenance Costs at a Straiton Corporation Factory Are Listed Below

question 7

Multiple Choice

Maintenance costs at a Straiton Corporation factory are listed below:
Management believes that maintenance cost is a mixed cost that depends on machine-hours.Use the high-low method to estimate the variable and fixed components of this cost.Compute the variable component first and round off to the nearest whole cent.Compute the fixed component second and round off to the nearest whole dollar.These estimates would be closest to:

• A) $0.10 per machine-hour; $54,382 per month
• B) $15.00 per machine-hour; $54,316 per month
• C) $9.12 per machine-hour; $21,309 per month
• D) $9.53 per machine-hour; $19,801 per month

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Definitions:

Open Market Operations

Technique in which the Fed buys or sells government bonds to affect the supply of money and credit.

Reserve Requirements

Regulations set by central banks determining the minimum amount of reserves that must be held by a commercial bank, used as a tool in monetary policy.

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An investment banker is a financial professional who advises and assists corporations and governments in raising capital, through issuing and selling securities.

Debt Offerings

Financial instruments issued by companies to raise capital, promising to pay back with interest.