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Advantages of the method of least squares over the high-low method include all of the following except:

a. A statistical method is used to mathematically derive the cost function.
b. Only two points are used to develop the cost function.
c. The squared differences between actual observations and the line (cost function) are minimized.
d. All the observations have an effect on the cost function.

Respuesta :

Answer:

The correct answer is letter "B": Only two points are used to develop the cost function.

Explanation:

In cost accounting, the High-Low Method is used to separate fixed and variable costs using the minimal quantity of information possible. Implementing this approach means taking the highest level of production and the lowest level of production and compare the costs at each point. The Least Squares Method, instead, is a set of complex mathematical calculations considering a wider number of dependent variables.

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