The Following Data Pertains to Activity and Maintenance Costs for Two

question 110

Multiple Choice

The following data pertains to activity and maintenance costs for two recent years: $\begin{array}{lrr} & \text { Year 2 } & \text { Year 1 } \\\text { Activity level in units} & 12,000 & 8,000 \\\text { Maintenance cost } & \$ 15,000 & \$ 12,000\end{array}$ Using the high-low method, the cost formula for maintenance would be:

• A)$1.50 per unit
• B)$1.25 per unit
• C)$3,000 plus $1.50 per unit
• D)$6,000 plus $0.75 per unit

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Definitions:

Cooperative Behavior

Actions taken by individuals or organizations that are designed to benefit others or achieve a common goal through collaboration.

Product Differentiation

Product differentiation is a strategy businesses use to make their products unique and stand out from competitors, often through design, quality, or features.

Price War

A competitive business strategy in which companies repeatedly cut prices to undercut competitors, often resulting in reduced profit margins for everyone involved.

Tacit Collusion

An unspoken, informal agreement among competitors to avoid certain competitive practices, like price wars, to keep prices at a certain level or to divide markets.