High Low method of of cost estimation

This page is incomplete at the moment, I’m working on it, so come back soon. Jonathan

What’s it all about?

A technique for predicting costs where variable and fixed costs are likely to change.

It’s a variation on the separation of the semi-variable costs that we have done on the Basic Concepts page of this site: http://www.managementaccounting.info/basic-concepts-of-management-accounting/.

 

 

 

 

Possible Written Questions.

(No indication of marks – the more marks a question gets, the more you are expected to write – detail that is, not just words!) If you can’t answer these, you need to do some more reading. I do ‘find’ questions elsewhere, so these aren’t all questions I have used myself.

What is meant by the term Relevant Range?

What are the limitations of the High Low method of cost estimation?

What are the limitations of using a Scatter Chart and the Line of Best Fit in cost estimation?