The high-low method is generally less accurate than the least-squares regression method for analyzing the behaviour of mixed costs.

Question

Quizplus · Accepted Answer

The high-low method only uses two data points (the highest and lowest activity levels) to estimate the fixed and variable components of mixed costs, which can result in a higher degree of error than the least-squares regression method. The least-squares regression method uses all of the available data points to estimate the equation of the line that represents the relationship between total cost and activity level, resulting in a more accurate analysis of mixed costs.

The High-Low Method Is Generally Less Accurate Than the Least-Squares