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The high-low method is frequently criticized for its simplicity and potential inaccuracies, as it relies solely on the highest and lowest activity levels to estimate fixed and variable costs. This approach can overlook variations in costs that occur at other activity levels, leading to misleading conclusions. Additionally, it assumes a linear relationship between cost and activity, which may not always hold true in real-world scenarios. Consequently, the method may not provide a reliable basis for decision-making in more complex situations.

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1mo ago

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