A disadvantage of the high-low method of cost analysis is that it:
A) typically results in a totally inaccurate cost formula.
B) is too time consuming to apply.
C) uses only two data points, which may not be representative of normal conditions.
D) relies totally on the judgment of the person performing the cost analysis.

Question

Quizplus · Accepted Answer

The high-low method uses only the highest and lowest activity levels to estimate variable and fixed costs, which may not accurately represent normal operating conditions or capture the variability in costs.

A Disadvantage of the High-Low Method of Cost Analysis Is