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Chapter 9

1.2 Advantages/disadvantages of the high-low method

 The high-low method has the enormous advantage of simplicity. It is
easy to understand and easy to use.

 It assumes that activity is the only factor affecting costs.

 It assumes that historical costs reliably predict future costs.

 It uses only two values, the highest and the lowest, so the results may
be distorted due to random variations in these values.

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