[hanakim2013]

@johnmoffat said:
You don’t actually need to use the words dependent and independent variable.
However what it means is that here the cost depends on the output (you would obviously overall expect that a higher output would mean a higher cost). So cost is the dependent variable and output is the independent one.

When doing high/low we take the highest and lowest of the independent variable (i.e. in this question, the output).

Thanks alot for your time, but i still could not clear about high low method and please help me to understand. In the quote, you concluded that when doing this method, taking the lowest and highest of the independent variable (the output). However, when i use another way to solve the question, i found the different answer. Here is my answer:
* First, i canculate the variable cost per unit before the stepup, v = (10000-4000)/(3000-2000) = 3
* From that, i have the fix cost , F = 10000
* From that, i have the fix cost after stepup, F’ = 1000 +500=1500
* And, now i could canculate the variable cost for all level of output
output $
1000 3000 (=1000×3)
2000 6000
3000 9000
4000 8000 (9500-1500)
_________________
10000 26000
So, the variable cost per unit is the average one, v = 26000/10000=2.6
Unfortunately, my result dose not match with any answer. Please, let me know there is problem with my canculation, and also give me more explanation about your above mentioned conclusion about high low method. Thanks very much!

[hanakim2013]

Dear Mr.John

In this case, the variable cost is different from each level of activity, so why we can use high low method for all levels. Does it still make sense? And, why the note also not mentioned this point. Thanks in advance!

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