# How the High-Low Method Works.

The high-low method is one of the most basic techniques used in cost accounting. It involves simply finding the highest and lowest points of a given data set, and using those points to calculate a cost function. This technique is most often used when data points are not evenly spaced, as is often the case with historical data.

To use the high-low method, the first step is to find the highest and lowest points in the data set. These points can be found by inspecting the data visually, or by using a simple mathematical formula. Once the highest and lowest points have been found, the next step is to calculate the cost function. This is done by finding the difference between the high and low points, and then dividing by the number of data points.

The high-low method is a very simple technique, but it can be quite accurate when used with historical data. It is also easy to use, which makes it a popular choice for cost accounting. Which of the following is an advantage of the high-low method? The advantage of the high-low method is that it is relatively easy to compute and understand. Additionally, it is not as likely to be influenced by outliers (extreme data points) as some other methods.

#### What is the equation of the line using the high low method and this data?

The equation of the line using the high low method is:

y = mx + b

where:

m = (y2 - y1) / (x2 - x1)

y1 = the highest price

y2 = the lowest price

x1 = the highest volume

x2 = the lowest volume

b = y - mx

y = the dependent variable (i.e. the price)

x = the independent variable (i.e. the volume)

#### Which step is performed first when using the High Low method?

The first step when using the High Low method is to find the highest and lowest points of the data set. This can be done by looking at the data set and finding the highest and lowest values, or by using a graphing tool to visualize the data. Once the highest and lowest points have been found, the next step is to find the difference between these two values. This difference is then divided by the high value to find the rate of change.

#### When using the High-Low method fixed costs are calculated after variable costs are determined?

Yes, when using the High-Low method, fixed costs are calculated after variable costs are determined. This is because the High-Low method uses the highest and lowest level of activity to calculate the variable costs, and then the fixed costs are calculated using the remaining amount. What are the three types of cost estimates? 1. Rough Order of Magnitude (ROM) Estimates

2. Preliminary Cost Estimates

3. Detailed Cost Estimates