The High-Low Method Is a Specific Application of the Two-Point

question 83

True/False

The high-low method is a specific application of the two-point method of cost estimation.

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Definitions:

Break-even Point

The level of production or sales at which total costs equal total revenue, resulting in no net loss or gain.

Contribution Margin

This represents the amount of revenue left over after deducting variable costs, which can be used to cover fixed costs and contribute to profits.

Variable Costs

Costs that change in proportion to the level of activity of a business, such as material and labor costs.

Break-even Point

The point at which total revenues equal total costs, resulting in neither profit nor loss, indicating the minimum sales volume necessary to cover all costs.