Gargymal Company Would Like to Estimate the Variable and Fixed

question 73

Multiple Choice

Gargymal Company would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last five months of operations.
-Using the high-low method of analysis, the estimated fixed cost per month for electricity is closest to:

• A) $1,306.50
• B) $870.00
• C) $1,290.00
• D) $1,150.00

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Definitions:

Initial Investment

The initial amount of money invested in a project or venture.

Financial Break-Even

The point at which total revenues equal total costs and expenses, leaving no net gain or loss.

Accounting Basis

Refers to the method under which income and expenses are recognized and reported. The two primary methods are cash basis and accrual basis accounting.

NPV

Net Present Value, a calculation that discounts all cash flows associated with a project or investment back to the present value to assess its profitability.