If a Company Is Comparing This Year's Financial Performance to Last

question 185

True/False

If a company is comparing this year's financial performance to last year's financial performance, it is using horizontal analysis.

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Definitions:

Variable Cost

Costs that vary directly with the level of production or service activity.

Fixed Cost

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

Period Cost

An expense that is not directly tied to the production process but rather incurred over a specific time period.

High-low Method

A technique used in accounting and finance to estimate variable and fixed costs based on the highest and lowest levels of activity.