The Following Data Relate to the Lisle Company for May

question 53

Multiple Choice

The following data relate to the Lisle Company for May and August of the current year: $\begin{array}{lrr} & \text { May } & \text { August } \\\text { Maintenance hours } & 25,000 & 29,000 \\\text { Maintenance cost } & \$ 1,175,000 & \$ 1,247,000\end{array}$ May and August were the lowest and highest activity levels, and Lisle uses the high-low method to analyze cost behavior. If maintenance hours are estimated to be 26,000 hours in October, which of the following statements is true?

• A) The variable maintenance cost is $18 per hour.
• B) The variable maintenance cost is $22 per hour.
• C) The variable maintenance cost is $24 per hour.
• D) The fixed maintenance cost is $72,000 per month.
• E) More than one of the other answers is true.

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Definitions:

Market Shares

The proportion of total market sales within an industry that is held by a specific company.

Herfindahl Index

A measure of market concentration used to determine the level of competition within an industry by summing the squares of the market shares for each firm.

Import Competition

The competitive pressure on domestic companies from foreign products and services entering the domestic market.