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Finding Variable Cost using High low Method

This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.

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June 8, 2015 at 4:45 pm #255162
Deborah Ndung’u
Member
- Topics: 5
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Hi. Kindly assist on obtaining the answer.
The following are the total overhead costs for different levels of output:
Costs ($) Output (Units)
9,600 2,400
15,000 4,800
24,000 7,200
22,800 9,600
What is the variable cost per unit (to the nearest $0.01) using the high-low technique?
June 8, 2015 at 5:26 pm #255198
John Moffat
Keymaster
- Topics: 57
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The highest activity level is 9,600 with costs of $22,800
The lowest activity level is 2,400, with costs of $9,600
The variable cost is therefore (22,800 – 9,600) / (9,600 – 2,400) = $1.83 per unit
(You really should watch the free lectures on this)
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