The Manager at Copley Mulch Has Been Trying to Calculate

question 261

Multiple Choice

The manager at Copley Mulch has been trying to calculate the portion of the company's overhead expenses that is fixed and the portion that is variable. Over the past twelve months, the number of square metres of mulch processed was highest in July, when the total monthly overhead costs totaled $6,000 for 25,000 square metres of mulch processed. The lowest number of square metres of mulch processed in the last twelve months occurred in October, when total overhead costs were $4,000 for 15,000 square metres of mulch processed. Use the high-low method to answer the following questions.
-What is the fixed portion of the monthly overhead expenses at Copely Mulch?

• A) $5,000
• B) $9,000
• C) $4,000
• D) $1,000

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Definitions:

Consumption

The part of personal income that is spent on goods and services rather than saved, influencing economic activity and demand.

Savings

The portion of income not spent on current expenditures or taxes, which is set aside for future use or investment.

Autonomous Consumption

Spending that does not depend on current income levels, such as basic necessities, implying that this consumption occurs even in the absence of income.

Disposable Income

represents the amount of money that households have available for spending and saving after income taxes have been accounted for.