Page 176 - P1 Integrated Workbook STUDENT 2018
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Chapter 10
The high-low method
2.1 Step by step process
This is a method of breaking semi-variable costs into their two components.
A semi-variable cost being a cost which is partly fixed and partly variable.
Step 1 Find the variable cost per unit
Increase in cost
=
Increase in activity
Step 2 Find the fixed cost
= Total cost – (variable cost per unit × activity level)
Step 3 Calculate the expected cost
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