The high-low method is used to derive the variable cost per unit and total fixed costs using just the highest and lowest volume levels.

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The high-low method is a tool used to estimate the variable and fixed components of mixed costs by analyzing the highest and lowest levels of activity. Once the highest and lowest activity levels are identified, the variable cost per unit can be calculated by dividing the change in total costs by the change in activity levels. Total fixed costs can then be determined by subtracting the total variable costs from the total costs at either the high or low activity level.

The High-Low Method Is Used to Derive the Variable Cost