Discuss the application of the high-low method
The high-low method is a technique for analyzing mixed costs. The high-low method analyzes changes at two levels of activity (the high end and the low end) within the relevant range. The changes in cost and activity are calculated for these two levels of activity. Dividing the change in cost by the change in activity determines the variable cost element portion of the mixed cost. Once this is determined, the fixed portion is computed by subtracting the variable element times either the high or low level of activity from the total cost at either the high or low level of activity.
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Indicate whether the statement is true or false.
In the context of the various strategies for investing in securities,investors who favorvalue investing:
A. face limited competition as this form of investment is the least preferred. B. try to find stocks that are undervalued in the market. C. are required to buy expensive stocks. D. are required to make frequent trades.
NewLinePhone Corp is very risky, with a beta equal to 2.8 and a standard deviation of returns of 32%. The
risk-free rate of return is 3% and the market risk premium is 8%. NewLinePhone's marginal tax rate is 35%. Use the capital asset pricing model to estimate NewLinePhone's cost of retained earnings.
What is an advantage of free-trade agreements?
A. They reduce the impact of globalization by preventing the loss of capital from a country. B. They provide manufacturing organizations with opportunities to reduce production costs. C. They protect domestic industries and jobs by taxing goods imported from outlying regions. D. They protect the well-being of people by restricting the flow of goods being exported from their country. E. They provide managers with a threat-free environment to work within.