🎯High-Low Method: 7 MCQs

Responses

1. 

   Imran Leghari 28 June 2025

   Hi, in question 3, Direct Labor cost is not considered as total cost whereas in question 4, direct labor cost is considered as total cost since its has 80,000 as fixed cost portion, this is bit confusing, please explain why in question 3 the cost is not considered as total cost.

   1. 

      Maroun, CPA 30 June 2025

      Hello Imran,

      “Direct labor costs” are typically considered purely variable, and the high-low method is meant for mixed costs (costs containing both fixed and variable elements).

      The terms in the questions should have referred to a mixed cost, such as “manufacturing overhead” or “total production cost,” rather than “direct labor cost.”

      I’ve updated both questions. Sorry for the confusion, and thank you for pointing this out!

      1. 

         Imran Leghari 5 July 2025

         Hello Maroun, thank you for your feedback and making corrections, it helps to clear the concepts.

         1. 

            Maroun, CPA 7 July 2025

            Hello Imran,

            You’re very welcome! I’m glad the clarification and updates helped resolve your confusion and clarified the concepts.
            Keep up the great work!