The High-Low Method Allows Managers to Differentiate Between Fixed and Variable

question 120

True/False

The high-low method allows managers to differentiate between fixed and variable costs when dealing with mixed costs.

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Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales activities, such as rent, salaries, and insurance.

Variable Factory Overhead

Expenses in a factory that vary with the level of production output, such as utility costs and materials.

Fixed Costs

Expenses that do not change with the level of production or sales over the short term, such as rent or salaries.

Direct Labor

This refers to the wages and other costs for labor directly involved in the production of goods or the provision of services, not including indirect labor costs such as maintenance.