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ACCA F2 Semi-Variable Costs – High-Low Method
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The only question that kind of confuses me here is this……Is there basically a DIFFERENCE between the high-low method that we did in the previous chapters and the high-low method we did now in this lecture??
No – there is no difference.
It is repeated here partly because it is important for the exam, but also to be able to compare it with regression analysis in the next lecture on this chapter of the notes.
Oh you have already answered this in the comments below, thanks!
Why do you want to take 2260 – (340 x 2) ???
I have no idea where you got these figures from!!
It should be 2160 – (300 x 2) which is equal to 1560 🙂
It’s the figures of January 340 units and $2260
What! are you telling me you don’t have these figures in your notes??? I have got different notes !!! o_O
Don’t be silly.
I realised afterwards where you had got the figures from and was going to correct my reply, but then I read that you had already seen the answer elsewhere. (and the lecture does make it clear anyway that high low is only a rough approximation).
Do appreciate that given I teach 5 papers I am answering so many questions each day (you are not the only student on here!) that I cannot always be perfect 🙂
I definitely appreciate the work you are doing, I don’t even have words to express my gratitude and no matter how many times I say this it won’t be enough. There aren’t many people who help others the way you are helping. And I am thankful for this a million times.
Good to hear that you made a mistake though 😛 but the even better thing is that you accepted it, setting up a good example for the new generation.
I heard somewhere that compliments are debts, so I just needed to get that out 🙂
Thank you 🙂
Great job on this topic.
If we take V.C. of 2 p.u. for every month, January 2260-(340*2)=1580, May 2300-(400*2)=1500, June 2266-(360*2)=1546. why its not the same for every month?
Because things do not work perfectly in real life.
That is why high/low method is not really so good. Later in the notes we look at regression analysis which looks at all of the observations and gives a better estimate.
Where does the figure viariable cost 840 come from?
got it 🙂
short and to the point!!!