A method that estimates cost behavior by connecting the costs linked to the highest and lowest volume is called the:
A) Scatter method.
B) High-low method.
C) Least-squares method.
D) Break-even method.
E) Step-wise method.

Question

Quizplus · Accepted Answer

The high-low method estimates cost behavior by using the costs associated with the highest and lowest volume levels. It calculates the variable cost per unit and fixed cost component based on the difference between the costs at the two volume levels.

A Method That Estimates Cost Behavior by Connecting the Costs