Indicate whether each of the following statements about the high-low method is true or false:
a. The formula for the high-low method is (Highest Cost - Lowest Cost) / (Highest Activity - Lowest Activity)
b. The high-low method can be expressed as Change in Cost / Change in Activity = Fixed Cost per Unit
c. The high-low method forces a line between the two most extreme activity data points.
d. The high-low method relies on the fact that the slope of a line is calculated as “run over rise.”
e. When using the high-low method, the slope of the line is interpreted as the fixed-cost component of a mixed cost.

  • CreatedFebruary 27, 2015
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