The following 6 months of data were collected on electricity cost and the number of machine hours in a factory.

-An independent variable value used in calculating the cost line using the high-low method is:
A) $27,950
B) 5,430
C) $25,160
D) 4,000

Question

The following 6 months of data were collected on electricity cost and the number of machine hours in a factory.

-An independent variable value used in calculating the cost line using the high-low method is:
A) $27,950 
B) 5,430 
C) $25,160 
D) 4,000

Quizplus · Accepted Answer

The high-low method involves taking the highest and lowest levels of activity and their corresponding costs to estimate the variable and fixed components of a cost formula. The independent variable in this context is the level of activity, not the cost. Therefore, the correct answer is the activity level, which is 5,430.

The Following 6 Months of Data Were Collected on Electricity