Song, Inc, Uses the High-Low Method to Analyze Cost Behavior

question 64

Multiple Choice

Song, Inc., uses the high-low method to analyze cost behavior. The company observed that at 22,000 machine hours of activity, total maintenance costs averaged $33.40 per hour. When activity jumped to 25,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $30.40.
On the basis of this information, the fixed cost was:

• A) $184,800.
• B) $210,000.
• C) $550,000.
• D) $734,800.
• E) $760,000.

Recognize the persistent and evolving challenges of workplace drug issues.

Appreciate the importance of a strategic approach in human resource management and training.

Identify legal obligations and effective practices in handling accommodations and evaluating performance.

Understand the principles and goals of equal employment opportunity (EEO), affirmative action, and managing diversity.

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Definitions:

Common Causes

Factors or conditions that are frequently responsible for variations in a process or system, as opposed to special or unique causes.

Special Causes

refer to uncommon, non-random sources of variation in a process, distinguishing them from normal or common causes of variation.

Process Capability Index

A statistical measure of a process's ability to produce output within given specification limits, used in process improvement strategies.

Process Capability Index

A statistical measure of process capability, indicating how well a process can meet specified performance standards.