High Low method Formula

High Low method Formula

Variable cost can be calculated from the following formula. This formula knows as high low methods. High low method is used to calculate the variable & fixed cost.

Variable Cost =            Cost (High Activity)- Cost (low activity)

                                        High activity – Low Activity

Example

110,000               200,000

60,000                150,000

70,000                180,000

Solution

= (200,000-150,000)/110,000-60,000

= 50,000/50,000

= 1 $ (Variable Cost)