Detailed Answer
Answer (C) is correct.
The fixed and variable portions of mixed costs may be estimated by
identifying the highest and the lowest costs within the relevant range.
The difference in cost divided by the difference in activity is the variable
rate. Once the variable rate is found, the fixed portion is determinable.
The high-low method is a simple approximation of the mixed cost
formula. The costs of using more sophisticated methods sometimes
outweigh the incremental accuracy achieved. In these cases, the high-low
method is sufficient.
