Using the High-Low Method, If the Highest Maintenance Cost and Machine

question 11

Multiple Choice

Using the high-low method, if the highest maintenance cost and machine hours are $40 000 and 12 000 hours respectively and the lowest maintenance cost and machine hours are $20 000 and 8 000 hours respectively, the variable maintenance costs per machine hour are:

• A) $3.33
• B) $5.00
• C) $2.50
• D) $3.00

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold or consumed within one year or within the normal operating cycle of the business, whichever is longer.

Current Ratio

A financial ratio that indicates how well a company can cover its short-term liabilities with its present assets.

Current Liabilities

Short-term financial obligations that are due within one year or within the company's operating cycle, whichever is longer.

Contingent Liability

A potential financial obligation that may occur in the future depending on the outcome of a specific event.