Choice "C" is correct. The high-low method uses the high and the low activity levels (orders) in order to determine the equation of a straight line [Y* X) + FC], thus separating the total costs into variable and fixed costs.
$4,320 - $3,120
1,800 - 1,200 | $2.00 per order |
Choice "b" is incorrect. Total orders and total costs are not used. The high-low method uses the high and the low activity levels (orders) in order to determine the equation of a straight line [Y* X) + FC], thus separating the total costs into variable and fixed costs.Choices "d" and "a" are incorrect. The high-low method uses the high and the low activity levels (orders) in order to determine the equation of a straight line [Y* X) + FC], thus separating the total costs into variable and fixed costs.
