A Company with Sales of $50,000,variable Costs of $35,000,and Fixed

question 156

True/False

A company with sales of $50,000,variable costs of $35,000,and fixed costs of $25,000 will earn a net income of $15,000.

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Definitions:

High-low Method

The high-low method is a straightforward way to estimate the variable and fixed components of a cost by using the highest and lowest activity levels and the corresponding total costs.

Machine Hour

A unit of measurement that represents an hour of operation of a machine or equipment.

Fixed Costs

Expenses that do not change in proportion to the level of production or sales, such as rent and salaries.

High-low Method

A technique used in accounting and finance to estimate fixed and variable costs based on the highest and lowest levels of activity.