Page 35 - F2 Slides 2017-18

Cost behaviour – Hi-low method

Step1 :

Select highest and lowest activity levels and their
associated costs.

Step 2 :

Variable cost per unit
=

Change in cost / Change in level of activity

Step 3 :
Find the fixed cost by substitution
Fixed cost per unit

=
Total cost – (Variable cost per unit × Number of

units)

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