When using the high-low method, what data point can be used to solve for the fixed cost component if months are on the X axis?
A) The "high" month
B) The "low" month
C) Either the "high" or the "low" month
D) Any month in the data set

Question

Quizplus · Accepted Answer

The high-low method uses the highest and lowest activity levels to estimate the variable and fixed components of a cost. Once the variable cost per unit 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 = Fixed Cost + Variable Cost * Activity Level).

When Using the High-Low Method, What Data Point Can Be