The High-Low Method

question 99

Multiple Choice

The high-low method

• A)calculates variable costs per unit by dividing the difference in the high and low activity levels by the high and low costs.
• B)gives accurate results of cost estimation,irrespective of the relevant range.
• C)helps in determining the fixed and variable components of a mixed cost.
• D)is based on the premise that all data points are necessary to define a linear cost-volume relationship.

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Definitions:

Weak Relationship

Refers to a situation where the correlation between two variables is low, indicating that they have little association with each other.

Correlation

A measure of the relationship between two or more variables; the degree to which they change together.

Coefficient of Alienation

A statistical measure used to quantify the degree of relationship or non-relationship between two variables, often indicating the extent to which they are unrelated.

Unexplained Variance

The portion of the total variance in a dataset that is not accounted for by the statistical model.