When Predicting Costs at Other Volumes Using a Cost Equation

question 79

Multiple Choice

When predicting costs at other volumes using a cost equation derived from either the high-low method or regression analysis, managers should consider

• A)outliers.
• B)general inflation.
• C)seasonality.
• D)all of the above.

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Definitions:

Fixed Costs

Unchanging costs associated with operation, irrespective of production or sales levels, such as expenses for premises, staff remuneration, and insurance protection.

Fixed Expenses

Costs that remain constant regardless of the level of production or sales activities, such as rent or salaries.

Net Operating Income

is the profit a company generates from its operations, excluding taxes and interest, focusing on the core business activities.

Obsolete Desk Calculators

Outdated calculating tools that have been replaced by more modern devices but might still be found in storage or used in niche scenarios.