Question
Which of the following statements is true with regard to the high-low method? The high-low method is a more accurate method compared to the least-squares
Which of the following statements is true with regard to the high-low method?
The high-low method is a more accurate method compared to the least-squares regression method because all data points are used when calculating the cost formula. | ||
The high-low method calculates a cost formula for fixed costs which is the slope of the line using the highest and lowest data points. | ||
The high-low method is a way to analyze fixed costs based on calculating the slope of a line using all data points. | ||
The cost formula calculated using the high-low method (and, therefore, only two data points) may misrepresent the true cost behavior during normal periods. |
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