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I am just learning the Hi-Lo method and I am struggling with how to tell the difference between a dependent and independent variable.
In one example the Independent variable is the output and in another it is the total cost so I am getting confused…
Is there any rules I can apply to remember this?
I am afraid that you cannot really learn a rule because there are so many different examples that can be asked.
You have to ask yourself which of the two variables will change because the other changes.
For example (an easy one), if you are given number of units produced and total cost of production, then you would expect the cost to change because the units changes (so cost is the dependent one).
Or, suppose you were given the amount spent on advertising, and the total sales. You would expect the total sales to change because the amount spent on advertising changed. So sales is the dependent one.
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