Using the High-Low Method,the Calculation of the Cost Line Uses

question 108

True/False

Using the high-low method,the calculation of the cost line uses the highest and lowest cost period.

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Definitions:

Plant Capacity

Plant capacity refers to the maximum output or production that a manufacturing facility can achieve under normal conditions.

Variable Costs

Costs that vary directly with the level of production or volume of output, in contrast to fixed costs.

Fixed Costs

Costs that remain constant regardless of a company's level of activity, including lease payments, wages, and insurance fees.

Variable Cost

A cost that grows in direct proportion to the volume of output or sales.