Refer to Lake Louise Company

question 33

Multiple Choice

Refer to Lake Louise Company. What would be the fixed cost of the janitorial services when using the high-low method?

• A) $4,080
• B) $7,320
• C) $6,120
• D) $11,000

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Definitions:

Default Risk

The risk associated with a borrower failing to make required payments on debt.

Liquidity Risk

The risk that an entity will not be able to meet its financial obligations as they come due because it cannot convert assets to cash quickly.

Deferred Consumption Risk

The risk associated with postponing consumption today in order to invest, with the potential of not having enough resources in the future.

Liquidity Risk

The risk that an entity will not be able to meet its short-term financial obligations due to the inability to quickly convert assets to cash without significant loss.