Use the Information Below to Answer the Following Question(s)

question 80

Multiple Choice

Use the information below to answer the following question(s) .
The Monroe Company uses the high-low method to estimate the cost function. The information for 2002 is provided below.

-When using the high-low method, the two observations used are the high and low observations of the

• A) cost driver.
• B) outcome variables.
• C) outliers.
• D) mixed costs.
• E) total pool cost.

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Definitions:

Estimated

A calculated approximation or judgement made without complete information, often used in planning or forecasting.

Temporary Account

A temporary account is used to track transactions during an accounting period, which is then transferred to a permanent account at the period's end, such as revenue and expense accounts.

Bad Debts Expense

Represents the amount of receivables a company does not expect to collect and is recorded as an expense.

Merchandise Inventory

The goods a company holds for the purpose of sale to customers in the normal course of business.