Which Formula Calculates the Variable Rate of a Mixed Cost $\frac{\text {high point output - low point output }}{\text {high point cost - low point cost }}$

question 153

Multiple Choice

Which formula calculates the variable rate of a mixed cost when using the high-low method?

• A)
• \(\frac{\text {high point output - low point output }}{\text {high point cost - low point cost }}\)
• B)
• \(\frac{\text { high point cost - low point cost }}{\text { high point output - low point output }}\)
• C) total cost at high point - (variable rate × output at low point)
• D) total cost at high point - (variable rate × output at high point)

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Definitions:

Balance Sheet

A financial statement that presents a company's assets, liabilities, and shareholders' equity at a specific point in time, offering a snapshot of its financial condition.

Operating Cycle

A measure of the time span between the purchase of inventory and the collection of cash from accounts receivable, highlighting the time taken for a business to turn its inventory into cash.

Current Liabilities

Short-term financial obligations a company must pay within a year, such as accounts payable, short-term loans, and accrued expenses.

Liquidation

The process of bringing a business to an end and distributing its assets to claimants, often occurring when a company is insolvent and unable to meet its financial obligations.