Theory Questions

1. Explain the term Fixed Cost. 2. Explain the term Committed Fixed Cost. 3. Explain the term Mixed Cost. Make the formula. 4. Explain the term Variable Cost. 5. Explain how to apply The High Low Method to separate variable costs and fixed costs. 6. What are the significant differences between The High Low Method and The Least Squares Regression Method? 7. What is the Contribution Format Income Statement?

Case Problem

Company XYZ is considering leasing a new machine. If the machine is rented, there will be direct labor savings.