The high-low method uses cost and activity data from just two periods to establish the formula for a mixed cost.

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The high-low method is a cost analysis technique that uses data from two periods, one with the highest activity level and one with the lowest activity level, to estimate the fixed and variable components of a mixed cost. By calculating the difference in cost between the high and low activity levels, and the difference in activity levels, the variable cost per unit of activity can be determined. This, in turn, can be used to estimate the fixed cost component of the mixed cost.

The High-Low Method Uses Cost and Activity Data from Just