The high-low method ________.
A) measures the difference between actual cost and estimated cost for each observation of the cost driver
B) calculates the standard deviation of residuals
C) calculates the slope coefficient using only two observed values within the relevant range and their respective costs
D) measures how well the predicted values, y, based on the cost driver, X, match actual cost observations, Y

Question

Quizplus · Accepted Answer

The high-low method is a cost estimation method that calculates the slope coefficient using only two observed values within the relevant range and their respective costs. It is a quick and simple method that uses two extreme values to estimate the variable and fixed components of costs.

The High-Low Method ________