A Major Disadvantage of the High-Low Method of Analyzing Cost

question 21

Multiple Choice

A major disadvantage of the high-low method of analyzing cost behavior is:

• A)It bases its solution on only two possibly extreme observations,rather than all of the data points.
• B)It results in its analyzed cost being treated as either fixed or variable,based on which type of behavior it more closely resembles.
• C)Two persons could draw different lines through the data points.
• D)It enables non-representative points,called outliers,to be identified.

Understand the significance of unique, valuable, and hard-to-imitate resources in sustaining competitive advantage.

Delineate the characteristics and assumptions underlying the Resource-Based View.

Comprehend the impact of competitive advantage on firm performance, including cost reduction and increased pricing power.

Gain insights into the Industrial Organization (IO) perspective on industry structure, performance, and competitive advantage.

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, entitling the holder to dividends and, in many cases, voting rights.

Securities

Financial instruments that represent ownership positions in corporations (stock), creditor relationships with governmental bodies or corporations (bonds), or rights to ownership as represented by an option.

Subscriptions Receivable

An amount owed by customers for subscription services or products that have been provided but not yet paid for.

Paid-in Capital

Paid-in capital is the amount of money that a company has received from shareholders in exchange for shares of stock, reflecting the capital that has been invested in the company beyond its par value.