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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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An advantage of the high-low method is that it

  1. a. is subjective.
  2. b. is objective.
  3. c. is the most accurate method.
  4. d. removes outliers.
  5. e. is descriptive of nonlinear data.

To determine

Identify the advantage of the high low method.

Explanation

High Low Method:

The method in which, high and low points of data are used to classify the mixed cost into fixed and variable cost known as high low method. This is one among the three costs of separation methods.

b.

High low method of cost separation is objective in nature as the two data points that is high and low points are used to analyze the cost. Due to objectivity, the answer arrived is similar for similar set of data. Therefore, this option is correct.

a.

High low method only considers two data points that is high point cost and low point cost and high output level and low output level...

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