The Phone Bill for Ace Accounting Consists of Both Fixed

question 199

Multiple Choice

The phone bill for Ace Accounting consists of both fixed and variable costs.Refer to the four month data below and apply the high-low method to answer the question.(Round your intermediate calculations to two decimal places.) $$\begin{array} { | l | r | r | } \hline & \text { Minutes } & \text { Total Bill } \\\hline \text { May } & 480 & \$ 3,400 \\\hline \text { June } & 210 & \$ 2,680 \\\hline \text { July } & 175 & \$ 2,650 \\\hline \text { August } & 330 & \$ 2,875 \\\hline\end{array}$$ What is the fixed portion of the total cost?

• A) $976.90
• B) $1,788.70
• C) $2,219.20
• D) $2,650.00

---

Definitions:

Variable Costing

A method of accounting that encompasses just the variable costs associated with manufacturing—such as direct materials, direct labor, and variable manufacturing overhead—as part of the product costs.

Unit Product Cost

An assessment of the total expense incurred to produce a single unit, incorporating direct costs like labor and materials, as well as indirect costs.

Year 1

A term typically used to refer to the first year of operation or the initial year in a specific timeframe.

Variable Costing

An accounting method that only considers variable costs (costs that change with production levels) when calculating the cost of goods sold.