The cost equation determined using the high-low method should be the same as the cost equation determined using regression analysis.

Question

Quizplus · Accepted Answer

The high-low method and regression analysis are two different approaches to estimating the cost behavior in relation to activity levels. The high-low method uses only two points (the highest and lowest activity levels) and may not account for all variability in the data, leading to potential inaccuracies. In contrast, regression analysis uses all data points to find the line of best fit, typically resulting in a more accurate cost equation that reflects the overall trend in the data.

The Cost Equation Determined Using the High-Low Method Should Be