High Low Method
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The following data pertains to the activity and maintenance costs for two recent years:
Year 2 Year 1
Activity level in units 11,125 6,000
maintenance costs 6250 4200
If the high low method is used to separate fixed and variable components of the cost, which of the following statements is correct?
A) the variable cost is .70 per unit of activity
B) the fixed costs is $2050
C) the variable cost is 2.50 per unit of activity
D) the fixed cost is 1,800
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Solution Summary
The solution explains how to use the high low method to separate the fixed and variable part of a mixed cost.
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