The high-low method
A)Is a useful means of predicting the highest cost a company will incur in the operating period.
B)Is a useful means of separating fixed and variable elements from a mixed cost.
C)Is more time-consuming than the scatter diagram method.
D)Is more complex than the use of linear regression analysis.

Question

Quizplus · Accepted Answer

The high-low method is a technique used to separate fixed and variable costs in a mixed cost. It involves identifying the highest and lowest activity levels and their corresponding costs, and then using this information to calculate the variable cost per unit of activity and the fixed cost component of the mixed cost. Options A, C, and D are incorrect as they do not accurately describe the purpose or process of the high-low method.

The High-Low Method