High Low Method for Estimating Variable and Fixed cost. Cost Accounting Course. CPA exam.CMA Exam
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In this video, I discuss
In this video, I discuss the high low method for estimating variable and fixed cost. In cost accounting, the high-low method is a way of attempting to separate out fixed and variable costs given a limited amount of data.
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The high-low method involves taking the highest level of activity and the lowest level of activity and comparing the total costs at each level.
If the variable cost is a fixed charge per unit and fixed costs remain the same, it is possible to determine the fixed and variable costs by solving the system of equations. It is worth being cautious when using the High-Low Method, however, as it can yield more or less accurate results depending on the distribution of values between the highest and lowest dollar amounts or quantities.
Understanding the High-Low Method
Calculating the outcome for the high-low method requires a few formula steps. First, you must calculate the variable cost component and then the fixed cost component, and then plug the results into the cost model formula
✔️Accounting students and CPA Exam candidates, check my website for additional resources: https://farhatlectures.com/
📧Connect with me on social media: https://linktr.ee/farhatlectures
#cpaexam #costaccounting#accountingstudent
The high-low method involves taking the highest level of activity and the lowest level of activity and comparing the total costs at each level.
If the variable cost is a fixed charge per unit and fixed costs remain the same, it is possible to determine the fixed and variable costs by solving the system of equations. It is worth being cautious when using the High-Low Method, however, as it can yield more or less accurate results depending on the distribution of values between the highest and lowest dollar amounts or quantities.
Understanding the High-Low Method
Calculating the outcome for the high-low method requires a few formula steps. First, you must calculate the variable cost component and then the fixed cost component, and then plug the results into the cost model formula
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