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High-low method of cost estimation

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Describe how the high-low method of cost estimation can be used in estimating the fixed cost component of a mixed cost in a business.

Discuss how you would implement activity-based costing for a hospital organization.

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This discusses the high-low method of cost estimation.

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HIGH-LOW METHOD:
This is a method for separating costs into fixed and variable components, based upon the difference between costs at the highest and lowest observed levels of activity
With the high-low technique, the highest and lowest levels of activity are identified for a period of time. Say the highest repair paid is $2000, and the lowest is $1500. The difference in cost between the highest and lowest level of activity represents the variable cost ($2000 - $1500 = $500) associated with the change in activity (1500 tshirts on the high ...

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