The High-Low Method Can Be Used to Approximate a Cost

question 21

Multiple Choice

The high-low method can be used to approximate a cost function.A disadvantage of this method is ________.

• A)the choice of the high and low points is subjective
• B)it is difficult to use
• C)it provides information about the reliability of the cost estimates
• D)it requires less past cost data than account analysis

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Definitions:

Sales Revenue

The total amount of money a company receives from its sales of goods or services before any expenses are subtracted.

Cross-Footing

A bookkeeping process that involves checking the mathematical accuracy of figures in financial statements by ensuring that sums of columns and rows respectively match.

Cash Receipts Journal

A specialized accounting journal used to record all receipts of cash.

Equality

In financial terms, refers to the state where two values, amounts, or figures are of the same value or balance each other out.