EXERCISE 5-9 (CONTINUED)

3. The high-low method would not provide an accurate cost formula in this situation since a line drawn through the high and low points would have a slope that is too flat and would be placed too high, cutting the cost axis at about $4,500 per month. The high and low points are not repre-sentative of all of the data in this situation.

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Solutions Manual, Chapter 5

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