Which statement best describes the high-low method?
A) It is the most accurate method.
B) It has the disadvantage of objectivity.
C) It is mathematically easy to calculate.
D) It cannot be affected by the presence of outliers.

Question

Quizplus · Accepted Answer

The high-low method is a relatively simple method of estimating fixed and variable costs. It involves using the highest and lowest activity levels to estimate the variable cost per unit and the total fixed cost. While it may not be the most accurate method, it is mathematically easy to calculate. Additionally, it is not affected by the presence of outliers, which may impact other methods of cost estimation. It does not have the disadvantage of objectivity; rather, it may be subjective in determining which activity levels to use as the highest and lowest.

Which Statement Best Describes the High-Low Method