What Is a Primary Disadvantage of the High-Low Method of Analyzing

question 64

Essay

What is a primary disadvantage of the high-low method of analyzing a mixed cost?

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Definitions:

Contingent Liability

A potential obligation that may arise depending on the outcome of an uncertain future event, which is not confirmed at the date of the financial statements.

Fair Value

What would be pocketed from an asset sale or the price to offload a liability during a methodical engagement with market individuals on the day of measurement.

Present Obligation

A duty or responsibility to act or perform in a certain way.

Goodwill

The intangible asset that arises when a buyer acquires an existing business but pays more than the fair market value of the net assets.