What Data Point Can Be Used to Solve for the Fixed

question 61

Multiple Choice

What data point can be used to solve for the fixed cost component when using the high-low method?

• A)The "high" month
• B)Either the "high" or the "low" month
• C)The "low" month
• D)Any month in the data set

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Definitions:

Fixed Costs

Costs that do not change with the level of output or sales, such as rent, salaries, and loan payments.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary depending on income levels or profit margins.

Variable Cost

Expenditures that fluctuate based on production or sales volume, for instance, materials and manpower.

Required Rate

The minimum rate of return on an investment that a manager or investor is willing to accept, considering its risk.