Question: You have been assigned an intern to help you forecast your firms costs at different volumes. He thinks he will get cost and volume data

You have been assigned an intern to help you forecast your firm’s costs at different volumes. He thinks he will get cost and volume data from the two most recent months, plug them in to the high-low method equations, and turn in the cost equation results to your boss before the hour is over. As his mentor, explain to him why the process is not quite as simple as he thinks. Point out some of the concerns he is overlooking, including your concerns about his choice of data and method.

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