What data point can be used to solve for the fixed cost component when using the high-low method?
A)The "high" month
B)Either the "high" or the "low" month
C)The "low" month
D)Any month in the data set

Question

Quizplus · Accepted Answer

The high-low method requires both the high and low points of activity to calculate the variable cost per unit. Once the variable cost is determined, either the high or low month can be used to solve for the fixed cost component by applying the formula for total cost (Total Cost = Variable Cost per Unit * Activity + Fixed Cost).

What Data Point Can Be Used to Solve for the Fixed