Which of the following is NOT a weakness of the high-low method?
A)Only two observations are used to develop the cost function.
B)The high and low activity levels may not be representative.
C)The method does not detect if the cost behaviour is nonlinear.
D)The method is relatively complex and difficult to apply.

Question

Quizplus · Accepted Answer

This statement is actually a weakness of the high-low method, so it is not the correct answer. A, B, and C are all weaknesses of the high-low method. A only uses two observations so it is not as accurate, B may not represent the true range of the cost function and C does not account for any nonlinear costs.

Which of the Following Is NOT a Weakness of the High-Low