High-Low Method: Clerical costs in the billing department of Craig Company are a mixture of variable and fixed components. Records indicate that average unit processing costs are $0.50 per account processed at an activity level of 32,000 accounts. When only 22,000 accounts are processed, the total cost of processing is $12,500. Assuming that this activity is within the relevant range, at a budgeted level of 25,000 accounts: Select one: a. Processing costs are expected to total $8,750. b. Fixed processing costs are expected to be $10,400 c. The variable processing costs are expected to be $0.35 per account processed. d. Processing costs are expected to total $14,975. e. None of the above is correct.
High-Low Method: Clerical costs in the billing department of Craig Company are a mixture of variable and fixed components. Records indicate that average unit processing costs are $0.50 per account processed at an activity level of 32,000 accounts. When only 22,000 accounts are processed, the total cost of processing is $12,500. Assuming that this activity is within the relevant range, at a budgeted level of 25,000 accounts: Select one: a. Processing costs are expected to total $8,750. b. Fixed processing costs are expected to be $10,400 c. The variable processing costs are expected to be $0.35 per account processed. d. Processing costs are expected to total $14,975. e. None of the above is correct.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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High-Low Method: Clerical costs in the billing department of Craig Company are a mixture of variable and fixed components. Records indicate that average unit
Select one:
a.
Processing costs are expected to total $8,750.
Processing costs are expected to total $8,750.
b. Fixed processing costs are expected to be $10,400
c.
The variable processing costs are expected to be $0.35 per account processed.
The variable processing costs are expected to be $0.35 per account processed.
d. Processing costs are expected to total $14,975.
e. None of the above is correct.
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