# Question 1 You have been asked to predict the first quarter of cost for water and sewage based on…

Question
1

You have been asked to predict the
first quarter of cost for water and sewage based on the past 12 months of
activity as listed below. You know that the water and sewage cost is both
fixed and variable each month. Using the High Low Method to seperate variable
and fixed costs, answer the questions below:

Month

Gallons Used

Cost

January

2,500

775.0

February

2,200

754.0

March

2,100

747.0

April

2,100

726.0

May

2,600

782.0

June

2,700

789.0

July

2,900

803.0

August

3,100

817.0

September

2,800

796.0

October

2,500

775.0

November

2,200

754.0

December

2,000

740.0

Using the High-Low method, calculate the variable cost
per gallon of water used.

A.

.09

B.

.07

C.

.10

D.

.05

10 points
Question
2

Based on the information above, calculate the fixed
cost each month.

\$600.00

\$250.10

\$500.10

\$400,89

10 points
Question
3

If you project that you will use 2,650 galllons of
water in the month of January, estimate the total variable cost for the
month of January.

A.

\$190.00

B.

\$185.50

C.

\$1,890.21

D.

\$2,900.30

10 points
Question
4

If you project that you will use 2,650
galllons of water in the month of January, estimate the fixed cost for the
month of January.

A.

\$500.00

B.

\$200.00

C.

\$600.00

D.

\$450.00

10 points
Question
5

If you project that you will use 2,650
galllons of water in the month of January, estimate the total water and
sewage cost for the month of January.

A.

\$710.30

B.

\$685.00

C.

\$785.50

D.

\$710.24

10 points
Question
6

Costs arising from the possession of facilities,
equipment and a basic organizational structure are ________.

capacity costs

discretionary costs

committed fixed costs

engineered costs

10 points
Question
7

Due to the economic downturn, a company has reduced
charitable donations to community groups. This is an example of a
________.

variable cost

committed fixed cost

capacity cost

discretionary fixed cost

10 points
Question
8

If a company eliminates all discretionary costs due to
a severe recession, this could ________.

ensure that the company reports a
net loss

ensure that the company reports a
net profit

reestablish a company’s
competitive position in an industry

impair a company’s competitive
position in an industry

10 points
Question
9

In a corporate setting, property taxes are an example
of a(n) ________.

mixed cost

committed fixed cost

discretionary fixed cost

engineering cost

10 points
Question
10

Which statement regarding fixed costs is TRUE?

Discretionary fixed costs preserve
management’s flexibility.

Committed fixed costs preserve
management’s flexibility.

Both discretionary and committed
fixed costs preserve management’s flexibility.

Discretionary fixed costs limit
management’s flexibility.