Page 25 - Manac Costing Test 1 class slides - 2. Variable And Absorption Costing
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COSTING
High-low method
• This method takes the highest and lowest activity
levels and associated costs from the available
information and calculates the change in volume
and cost which has occurred between them.
• The assumption is that the change in total costs
between the two levels is attributable to the
variable costs, because fixed costs stay the same
within a normal capacity range (0%–100%).
• Total cost = (Variable cost x Units produced) +
Fixed costs
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