The high-low method can be used to estimate the cost equation using just two points.

Question

Quizplus · Accepted Answer

The high-low method requires at least three data points to estimate the cost equation. One data point with the highest activity level, one data point with the lowest activity level, and one additional data point with an activity level in between the high and low points. Using just two points would not provide enough information to estimate the fixed and variable components of the cost equation accurately.

The High-Low Method Can Be Used to Estimate the Cost