Taunton Company Uses the High-Low Method to Estimate Its Cost

question 61

Multiple Choice

Taunton Company uses the high-low method to estimate its cost function.The information for 2017 is provided below:

What is the constant for the estimated cost equation?

• A)$277,500
• B)$300,000
• C)$165,000
• D)$135,000

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Definitions:

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard hourly labor rate.

Labor Rate Variance

The difference between the actual hourly wage paid to workers and the standard or expected hourly wage.

Cash Account

An account that records all transactions involving cash, including receipts and payments.

Ending Balance

The amount of money remaining in a financial account at the end of a reporting period, after all transactions have been accounted for.