The method of analyzing cost behavior that uses two data points to first determine the variable cost per unit and then the total fixed cost is the:
A)Method of least squares.
B)Scattergraph method.
C)High-low method.
D)Observation method.

Question

Quizplus · Accepted Answer

The high-low method analyzes cost behavior by using two extreme data points (the highest and lowest) to calculate the variable cost per unit and the total fixed cost. Other methods, such as the method of least squares, involve statistical calculations and more data points. The scattergraph method plots all data points on a graph to visually identify any patterns or trends, but it does not provide a specific calculation for variable and fixed costs. The observation method is subjective and relies on personal experience rather than data analysis.

The Method of Analyzing Cost Behavior That Uses Two Data