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High-Low Method

Campus Copy & Printing wants to predict copy
machine repair expense at different levels of copying activity (number of copies made). The following
data have been gathered:

Copy Machine

Month Repair Expense Copies Made
May $ 8,500 300,000
June 12,500 500,000
July 20,500 900,000
August 16,500 700,000
September 10,500 400,000

Determine the fixed and variable components of repair expense using the high-low method.Use
copies made as the measure of activity.

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Solution Preview

In the high low method we take the highest and the lowest values
Variable cost = ...

Solution Summary

The solution explains the use of High-Low Method in separating the fixed and variable parts of a mixed cost