High-low point method High-low poin

High-low point method High-low point method is a technique used to divide a mixed cost into its variable and fixed components.Sometimes it is necessary to determine the fixed and variable components of a mixed cost figure. Several techniques are used for this purpose such as scatter graph method, least squares regression method and high-low point method. On this page I will explain the use of high-low point method.Under high-low point method, an estimated variable cost rate is calculated first using the highest and lowest activity levels and mixed costs associated with them. This estimated variable cost rate is used to calculate total estimated variable cost included in the mixed cost figures at highest and lowest activity levels. The estimated variable cost is then subtracted from the total mixed cost figures at highest and lowest activity levels to find the fixed cost component.