Which of the following is a weakness of the high-low method?
A)The method is easy to apply because only two observations are required to develop the cost function.
B)The data points used may represent atypical cost-activity relationships.
C)Any two observers will arrive at the same conclusion.
D)The method is quick to use and easy to understand.

Question

Quizplus · Accepted Answer

The high-low method assumes that the highest and lowest activity levels represent the true cost-activity relationship, which may not be the case if those data points are outliers or not typical of the other data points. Therefore, the data points used may not accurately represent the cost-activity relationship, making it a weakness of the high-low method.

Which of the Following Is a Weakness of the High-Low