66.At the high level of activity in November, 7,000 machine hours were run and power costswere $18,000. In April, a month of low activity, 2,000 machine hours were run and powercosts amounted to $9,000. Using the high-low method, the estimated fixed cost element ofpower costs is a.$18,000.b.$9,000.c.$5,400.d.$12,600. Ans: C, SO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Performance Measurement 67.Gribble Company’s high and low level of activity last year was 60,000 units of productproduced in May and 20,000 units produced in November. Machine maintenance costswere $52,000 in May and $20,000 in November. Using the high-low method, determine anestimate of total maintenance cost for a month in which production is expected to be45,000 units. 68.Which of the following is nottrue about the graph of a mixed cost? 69.Which of the following is nota mixed cost? IMA: Business Economics FOR INSTRUCTOR USE ONLY 18 - 13
Test Bank for Accounting, Fourth Edition 70.In using the high-low method, the fixed cost a.is determined by subtracting the total cost at the high level of activity from the totalcost at the low activity level.b.is determined by adding the total variable cost to the total cost at the low activity level.c.is determined before the total variable cost.d.may be determined by subtracting the total variable cost from either the total cost atthe low or high activity level.Ans: D, SO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA:Business Economics
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