When Managers Use Their Judgment to Classify Costs as Variable,fixed,or

question 76

Multiple Choice

When managers use their judgment to classify costs as variable,fixed,or mixed,which method are they using?

• A)Account analysis
• B)High-low method
• C)Regression analysis
• D)Low-high method

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Definitions:

Lease Inception

The point at which the lease agreement is executed, signifying the beginning of the lease term.

Related Liability

An obligation that is directly associated with the operating activities or financial situation of a business.

Operating Lease

A lease agreement allowing one to use an asset without ownership, typically with shorter terms than a finance lease.

Capital Lease

A lease agreement in which the lessee essentially acquires all the benefits and risks of ownership of the asset, even though legal title may not be transferred.