Economics · Cost Accounting
A key limitation of the high-low method of cost estimation is that it:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Requires advanced statistical tables for accurate computation of the fixed element.
- 2Is highly susceptible to distortion if the highest or lowest activity points are atypical.✓
- 3Assumes a perfectly non-linear relationship between cost and activity.
- 4Cannot be used to estimate costs when stepped fixed costs are present.
Correct answer
Is highly susceptible to distortion if the highest or lowest activity points are atypical.
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