The Most Serious Shortcoming of the High-Low Method of Estimating

question 15

Multiple Choice

The most serious shortcoming of the high-low method of estimating a mixed cost function is that it:

• A) usually overestimates the total cost.
• B) is based on a very small portion of the available data.
• C) focuses on fixed costs only and ignores variable costs.
• D) can only be used if contribution margin income statements are also being used.

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Definitions:

Expected Gains

Anticipated benefits or profits that are expected from an investment, project, or decision.

Total Wage Bill

The total amount of money paid by an employer to its employees as wages.

Domestic Output

The total value of all goods and services produced within the borders of a nation over a specific period of time.

Pre-migration

The period or processes occurring before the migration of individuals or groups from one place to another.