Under what circumstances might the high-low method give unsatisfactory results?
A)if the data points all fall on a line
B)if volume of activity is heavy
C)if volume of activity is light
D)if the points are unrepresentative

Question

Quizplus · Accepted Answer

The high-low method assumes that the variable cost per unit is constant, but this may not be the case if the points used to calculate the variable cost per unit are unrepresentative or outliers. Therefore, if the points used are not a good representation of the relationship between cost and activity level, the high-low method can provide unsatisfactory results.

Under What Circumstances Might the High-Low Method Give Unsatisfactory Results