A Disadvantage of the High-Low Method of Cost Analysis Is

question 85

Multiple Choice

A disadvantage of the high-low method of cost analysis is that:

• A) it cannot be used when there are a very large number of observations.
• B) it is too time consuming to apply.
• C) it uses two extreme data points, which may not be representative of normal conditions.
• D) it relies totally on the judgment of the person performing the cost analysis.

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Definitions:

New Businesses

New businesses are entities in their early stages of operation, often characterized by innovation, development of products or services, and efforts to secure market position.

Small Business Characteristics

Pertains to features that define small businesses, such as limited revenue and workforce size, often centered around personalized service and local operation.

Market Research

The activity of gathering information about consumers' needs and preferences to identify market trends and potential areas of opportunity for businesses.

Small Businesses

Enterprises characterized by a small number of employees, limited revenue, and usually independently owned and operated.