Lawson Lumber Uses the High-Low Method to Estimate Electricity Cost,which

question 70

Multiple Choice

Lawson Lumber uses the high-low method to estimate electricity cost,which varies in relation to machine hours.Based on the following data,how would the cost function be stated if 'X' is the number of machine hours?

• A) $525 + $0.35 X
• B) $300 + $0.50 X
• C) $500 + $0.50 X
• D) $470 + $0.35 X

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Definitions:

Times Interest Earned

A ratio that measures a company's ability to meet its interest payments based on its earnings before interest and taxes.

Net Income

The profit of a company after all expenses and taxes have been subtracted from total revenue, indicating the company's actual profitability.

Interest Expense

The cost incurred by an entity for borrowed funds; it is the price paid for the use of borrowed money.

Carrying Value

The amount at which an asset is recognized in the balance sheet, subtracting any accumulated depreciation or amortization.