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

question 136

True/False

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

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Definitions:

Carrying Cost

The total cost of holding inventory, including storage, depreciation, obsolescence, and insurance.

Storage Costs

Expenses associated with storing a company's products or materials until they are needed or sold.

Insurance and Taxes

Mandatory expenses that include payments for risk coverage policies and contributions to state and federal governmental bodies.

Restocking Costs

Expenses associated with replenishing inventory, including purchase, delivery, and storage costs.