You Have Calculated,using the High-Low Method,a Variable Cost Per Machine

question 116

Multiple Choice

You have calculated,using the high-low method,a variable cost per machine hour of $0.80 for your production power costs.Power costs at 6,000 machine hours are $5,400;at 9,000 machine hours,they are $7,800.What are the total fixed costs that you would use to estimate production power costs for your company at any level within your relevant range?

• A)$600
• B)$6,400
• C)$2,400
• D)$4,800

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Definitions:

Debt/Equity Ratio

Debt/Equity Ratio is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

Compromise Policy

A strategy or approach that involves making concessions or finding a middle ground between different opinions or objectives in decision-making processes.

Cash Dividend

A distribution of a company's earnings to shareholders in the form of cash, indicating the company's underlying profitability and cash flow health.

Flotation Costs

Costs that a company faces when it issues new securities, consisting of fees for underwriting, legal services, and registration.