ACCT 2522 - High low method (1 Viewer)

[hongco1990]

Hi there,

I'm a bit confused about the high low method with relevant range involved. Hope you'll help me out. Like when we are given the relevant range, should we only pick highest and lowest point on scatter diagram within that relevant range to calculate cost function? Or we just pick any 2 points as long as they are the highest and lowest, no matter if they're in the relevant range or not?! (Then for any given activity outside the range, we just conclude the cost behaviour prediction is not accurate...)

Thanks in advance,

 

[serenetwilight]

you pick the points on the scatter diagram... it is in the textbook =]

 

[moll.]

Hi there,

I'm a bit confused about the high low method with relevant range involved. Hope you'll help me out. Like when we are given the relevant range, should we only pick highest and lowest point on scatter diagram within that relevant range to calculate cost function? Or we just pick any 2 points as long as they are the highest and lowest, no matter if they're in the relevant range or not?! (Then for any given activity outside the range, we just conclude the cost behaviour prediction is not accurate...)

Thanks in advance,

Pretty sure if you picked just any point then it wouldn't be the high-low method. It'd be the point-A-point-B method.
You pick the two points with the highest and lowest independant variables and draw a line between them.