Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 10 - Determining How Costs Behave - Assignment Material - Questions - Page 407: 10-9

Answer

When using the high-low method, you should base the high and low observations on the cost driver, not the dependent variable. This helps identify the cost driver's relationship with the dependent variable and allows for a more accurate estimation of the cost function.

Work Step by Step

When using the high-low method, you should base the high and low observations on the cost driver, not the dependent variable. This helps identify the cost driver's relationship with the dependent variable and allows for a more accurate estimation of the cost function.
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