The hi-lo technique could be appropriate for estimating costs when: There is a single product with...

The hi-lo technique could be appropriate for estimating costs when:

		There is a single product with a (mostly) linear cost sstructure
		For large organisations with many product lines
		When costs increase in an exponential curve
		When costs decrease due to economies of scale

Expert Solution

Answer:

OPTION A: There is a single product with a (mostly) linear cost structure

Explanation:

High-low method refers to a method in which variable costs and fixed costs are segregated from mixed costs on the basis of two extreme values.

This method is most suitable when there is a single product with a linear cost structure. In simple words, when the cost increases proportionately.

In case of large corporations, or costs which arise exponentially, regression method should be used as it uses all the values in the given data.

Clearly, option 'A' is correct and other options are incorrect.

In case of any doubt or clarification, you're welcome to come back via comments.

ekkarill92 answered 2 years ago

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