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.