This preview shows page 1. Sign up to view the full content.
Unformatted text preview: Hi Julie, Outliers are abnormal or non-representative observations within a data set that may be inadvertently used in the application of the high-low method. Use of the high-low method requires the use of only two past data observations: the highest level of activity (such as the number of units produced during a time period) and the associated total production cost incurred at that level, and the lowest level of activity and its associated cost. All other data points are ignored and even the two observations used must represent operations that have taken place under normal conditions. The loss of input from the unused data is a theoretical limitation of this method. Jack...
View Full Document
- Fall '10