Quick Definition

The High-Low Method is a cost accounting technique used to estimate the fixed and variable components of a company's costs.

Formula

Examples

• 1A company analyzing its electricity bills over the past year to determine the fixed monthly charge and the variable cost per kilowatt-hour.
• 2A manufacturing firm using the High-Low Method to estimate the variable costs of production based on the highest and lowest levels of activity.
• 3A restaurant determining the variable costs of ingredients based on the busiest and slowest months.

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