The Phone Bill for a CPA Firm Is a Mixed

question 152

Multiple Choice

The phone bill for a CPA firm is a mixed cost. Please refer to the 4-month data below, apply the high-low method, and answer the question. How much is the fixed portion of the total cost?

• A)$2,050
• B)$1,960
• C)$2,500
• D)$250

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Definitions:

Indirect Method

A cash flow statement approach that adjusts net income for changes in non-cash working capital and non-operating adjustments to calculate cash flow from operations.

Operating Activities

Transactions and other events that are not investing or financing activities, contributing to the company's primary operations and cash flow.

Direct Method

A way to present the cash flow from operating activities by listing major operating cash receipts and payments, making it easier to understand than the indirect method.

Operating Activities

Day-to-day actions that relate directly to the production, sale, and delivery of a company’s products and services.