Reference no: EM132749925

Problem 1: Explain each limitation listed by saying how each limitation may affect the validity of the computations derived by using the high/low method

Option 1: It relies on historical cost date and assumes this data can reliably predict future costs

Option 2: It assumes that activity levels are the only factor affecting costs

Option 3: It uses only two values (highest and lowest) to predict future costs and these result may be distorted because of random variations which may have occurred

Option 4: Bulk discounts may be available for purchasing resources in large quantities.