The High-Low Method Is Used in Classifying a Mixed Cost

question 71

True/False

The high-low method is used in classifying a mixed cost into its variable and fixed elements.

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Definitions:

Budgeted Finished Goods

An estimate of the finished goods a company plans to produce over a certain period as part of its budgeting process.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.

Cost of Goods Manufactured

The total cost incurred by a company to produce goods in a specific period, including materials, labor, and overhead.

Inventory

The raw materials, work-in-progress (WIP), and finished goods that a company holds for the purpose of sale in the ordinary course of business.