The High-Low Method Basically Fits a Line Through the Highest

question 187

Multiple Choice

The high-low method basically fits a line through the highest and lowest ________ points.

• A)fixed cost
• B)variable cost
• C)volume
• D)none of the above

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Definitions:

Liability

An obligation or debt that an entity owes to another party, which is expected to be settled through the transfer of assets or services.

Variable Costs

Costs that vary directly with the level of production output or sales volume, such as materials and labor.

Activity Level

The volume of work or the number of transactions handled by a business or department, which can drive the allocation of costs based on activity-based costing principles.

Fixed Costs

Overheads that stay the same no matter the quantity of goods produced or sold, like rent, salaries, and insurance.