Your Company Discovers a Better Way to Produce Mousetraps,but Your

question 115

Multiple Choice

Your company discovers a better way to produce mousetraps,but your better methods are not apparent from the mousetraps themselves.Your knowledge of how to more efficiently produce mousetraps is

• A)common technological knowledge.
• B)common,but not technological,knowledge.
• C)proprietary technological knowledge.
• D)proprietary,but not technological,knowledge.

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Definitions:

High-Low Method

A technique in cost accounting used to estimate fixed and variable cost components of a product or service based on the highest and lowest levels of activity.

Variable Cost Elements

Expenses that change in proportion to the amount of goods produced or the volume of sales.

Fixed Cost Elements

Costs that do not change with the level of production or sales activity within a certain range or over a certain period.

Telephone Costs

Expenses related to the usage of telecommunication services by a business, categorized as utility expenses and recorded in the income statement.