(Appendix 5A) Wuensch Inc

question 48

Multiple Choice

(Appendix 5A) Wuensch Inc., an escrow agent, has provided the following data concerning its office expenses:
Management believes that office expense is a mixed cost that depends on the number of escrows completed. Note: Real estate purchases usually involve the services of an escrow agent that holds funds and prepares documents to complete the transaction.
-Using the high-low method,the estimate of the variable component of office expense per escrow completed is closest to:

• A) $45.44
• B) $42.76
• C) $88.22
• D) $131.00

---

Definitions:

Firm's Managers

Individuals responsible for making significant corporate decisions and managing the overall operations and resources of a business.

Capital Budgeting

The process by which a business determines and evaluates potential expenses or investments that are significant in amount.

Project Cash Flows

Refers to the net amount of cash being transferred into and out of a project, considering all revenues, expenses, and capital costs over its life.

Risk

In finance, risk is the potential for financial loss or the variability in the returns of an investment.