The high-low method is used to ________.
A) determine the highest price that can be charged for a product
B) separate mixed costs into their variable and fixed components
C) identify the relevant and irrelevant costs of a business
D) determine the sales level at highest capacity

Question

Quizplus · Accepted Answer

The high-low method is a cost analysis technique used to separate mixed costs into their variable and fixed components. It involves identifying the highest and lowest levels of activity and their corresponding costs. By subtracting the lowest cost from the highest cost and dividing that difference by the change in activity levels, the variable cost per unit of activity can be determined. The fixed cost component can then be calculated by subtracting the variable cost component from the total mixed cost at either the high or low activity level.

The High-Low Method Is Used to ________