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Hicks Company sells health insurance. It is interested in determining the cost equation for claims processing so it can more accurately budget its claims department. Information for the high and low costs and volumes for last year appear below Month May Activity Cost 100,000 claims $80,000 October 150,000 claims $100,000 Using the high-low method, with claims as to the activity driver, what is the level of fixed costs? a. $60,000 b. $120,000 c. $40,000 d. $0.40 per claim

Hicks Company sells health insurance. It is interested in determining the cost equation for claims processing so it can more accurately budget its claims department. Information for the high and low costs and volumes for last year appear below Month May Activity Cost 100,000 claims $80,000 October 150,000 claims $100,000 Using the high-low method, with claims as to the activity driver, what is the level of fixed costs? a. $60,000 b. $120,000 c. $40,000 d. $0.40 per claim

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hicks Company sells health insurance. It is interested in determining the cost equation for claims processing so it can more accurately budget its claims department. Information for the high and low costs and volumes for last year appear below Month May Activity Cost 100,000 claims $80,000 October 150,000 claims $100,000 Using the high-low method, with claims as to the activity driver, what is the level of fixed costs? a. $60,000 b. $120,000 c. $40,000 d. $0.40 per claim
Transcribed Image Text:Hicks Company sells health insurance. It is interested in determining the cost equation for claims processing so it can more accurately budget its claims department. Information for the high and low costs and volumes for last year appear below Month May Activity Cost 100,000 claims $80,000 October 150,000 claims $100,000 Using the high-low method, with claims as to the activity driver, what is the level of fixed costs? a. $60,000 b. $120,000 c. $40,000 d. $0.40 per claim
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