High-Low Method

It is not suitable for small businesses

It is time-consuming and complex

It can distort costs due to reliance on extreme values (correct)

It requires advanced statistical knowledge

Developing financial analysis models

Splitting mixed costs into fixed and variable costs (correct)

Estimating the number of guests in a hotel

Calculating total costs incurred in a given month

{Variable cost per unit of activity} ={Change in total cost}}{Change in activity}}$

Variable cost per unit of activity} = {Total cost}}{Level of activity}

$ Fixed cost} = {Total cost} - ( {Variable cost per unit of activity} imes ext{Level of activity})$

$ Total cost} = {Fixed cost} + ({Variable cost per unit of activity}{Level of activity})$ (correct)

<p>Level of activity (number of guests) in a given month and the total costs incurred in each month</p> Signup and view all the answers

<p>It can lead to distorted cost estimates</p> Signup and view all the answers