Fromme's Frocks Has the Following Machine Hours and Production Costs

question 116

Multiple Choice

Fromme's Frocks has the following machine hours and production costs for the last six months of last year:
$$\begin{array} { | l | r | r | } \hline \text { Month } & \text { Machine Hours } & \text { Production Cost } \\\hline \text { July } & 15,000 & \$ 12,075 \\\hline \text { August } & 13,500 & 10,800 \\\hline \text { September } & 11,500 & 9,580 \\\hline \text { October } & 15,500 & 12,080 \\\hline \text { November } & 14,800 & 11,692 \\\hline \text { December } & 12,100 & 9,922 \\\hline\end{array}$$
If Fromme expects to incur 14,000 machine hours in January,what will be the estimated total production cost using the high-low method?

• A) $8,750.00.
• B) $11,142.50.
• C) $22,400.00.
• D) $10,889.10.

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Definitions:

Price Adjustment

A change in the purchase price of a good or service in response to market factors or contractual terms.

Eurobanks

Banks that make loans and accept deposits in foreign currencies.

Foreign Currencies

Money or other forms of payment used in other countries, distinct from the domestic currency of the home country.

Arbitrage

The practice of taking advantage of price differences in different markets for the same asset, thus earning a profit without any risk.