In applying the high-low method of cost estimation to mixed costs, how is the total fixed cost estimated?How does the sales mix affect the calculation of the break-even point?

Answered: In applying the high-low method of cost…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 4DQ

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In applying the high-low method of cost estimation to mixed costs, how is the total fixed cost estimated?
How does the sales mix affect the calculation of the break-even point?

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The high-low technique in standard costing attempts to distinguish between fixed and variable expenses given a small quantity of data. Using the greatest and lowest level of activity, the high-low technique examines the overall expenses at each level.

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