The Macon Company Uses the High-Low Method to Determine Its

question 16

Multiple Choice

The Macon Company uses the high-low method to determine its cost equation.The following information was gathered for the past year:
$$\begin{array} { | l | r | r | } \hline & \begin{array} { r } \text { Machine } \\\text { Hours }\end{array} & \begin{array} { r } \text { Direct Labor } \\\text { Costs }\end{array} \\\hline \text { Busiest month (June) } & 14,000 & \$ 200,000 \\\hline \begin{array} { l } \text { Slowest month } \\\text { (December) }\end{array} & 6,000 & \$ 120,000 \\\hline\end{array}$$
If Macon expects to use 10,000 machine hours next month,what are the estimated direct labor costs?

• A) $160,000.
• B) $180,000.
• C) $175,000.
• D) $150,000.

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Definitions:

Linear Equation

A mathematical statement where the sum of two variables is equal to a constant, forming a straight line when graphed.

Solve

The process of finding the values that satisfy an equation or inequality.

Conditional Equation

An equation that is true for certain values of its variables, often used in algebra to describe a relationship subject to specific conditions.

Identity Equation

An equation that is true for all values of the variable, typically used to express fundamental algebraic properties.