High-Low Method Calculator
Calculate variable and fixed costs using the high-low method by entering your cost and activity data below.
Input Data
| Period | Activity Level (Units) | Total Cost ($) | |
|---|---|---|---|
| 1 | |||
| 2 |
About the High-Low Method
The high-low method is a simple technique used in cost accounting to separate fixed and variable costs by comparing the highest and lowest activity levels.
How It Works:
- Identify the highest and lowest activity levels
- Calculate the variable cost per unit: (Total Cost at High Activity – Total Cost at Low Activity) / (High Activity Units – Low Activity Units)
- Determine fixed costs by subtracting total variable costs from total costs at either the high or low point
- Form the cost equation: Total Cost = Fixed Cost + (Variable Cost per Unit × Activity Level)
Limitations:
- Only uses two data points (high and low)
- Assumes linearity in cost behavior
- Can be inaccurate if high/low points are outliers