Mixed Cost and the High-Low Method

[@nobuyukiniki8980]

Today is the day that I begin studying managerial acc... how I’m a bit more confidence after your video ! Thank you so much !!

[@allkristiningram]

You're welcome! Good luck!

[@vanifesto]

SUPER HELPFUL! I didn't understand this all semester and you just made it click. Sincerest thanks. My grades will appreciate it!

[@allkristiningram]

Go glad I could help. Good luck with the end of the semester!

[@allkristiningram]

This method is specifically used for costs that have a variable and fixed component (which is why it is called a mixed cost). This is generally used when companies generate costs, knowing there are fixed and variable components which must be separated in order to plan for the future (i.e. budgeting). If the cost is either fixed or variable, this method is not used. Please let me know if you still have a question.

[@allkristiningram]

You're welcome. Glad I could help your understanding.

[@allentian3009]

Good learning and express a way for budgeting. :)

[@allkristiningram]

Glad you think so!

[@Ecticon]

I wish the text book explained it this way. This made sense once I watched this video. Thank you.

[@allkristiningram]

Ecticon You're welcome. Glad I could help.

[@fahad12125]

your way of teaching is excellent . can you refer me to any of ur video where you teach how to find mixed cost .

[@allkristiningram]

Here are my two posts on mixed cost: accountinginfocus.com/managerial-accounting-2/cost-behavior/mixed-cost/ accountinginfocus.com/managerial-accounting-2/cost-behavior/mixed-cost-and-the-high-low-method/

[@yuju1195]

Hi! Can I ask something? We have this assignment due next week and I was wondering if electricity bills is applicable to this? Thanks! Hope you reply

[@allkristiningram]

Yes they are. Most electricity bills have fixed and variable components.

[@mrss.s.bee.3413]

Hi I'm new to accounting and we are learning about this topic atm. I'm just a bit confused with the maths part. I have calculated on my calculator, 1441-1134=307 1682-1068=614 614÷307=2 Please tell me where i am going wrong, I am trying to figure out how you got .50 I really hope I get a reply thank you in advance

[@allkristiningram]

It's 307/614

[@mrss.s.bee.3413]

Ok so I would do the change in cost amount first / change in activity, so its 307 change in cost / 614 change in activity.. Is that right?

[@allkristiningram]

right

[@1q1q1q981]

thank you Kristin, great video, really clear :)

[@allkristiningram]

You're welcome

[@lysneylandasmr6225]

My accounting grade and I appreciate you!

[@allkristiningram]

Thank you!

[@magdatirado1759]

Thank you so much for helping me understand this.

[@allkristiningram]

+Magda Tirado I'm so glad you found the video helpful! Thanks for commenting!

[@Vikermajit]

Very informative video...if I may comment, I think 'Activity' should be replaced by 'units' or 'quantity'....

[@allkristiningram]

The reason I used "Activity" is because it is the language used in most textbooks. Also, there are a variety of things that could be used like hours, oil changes, tax returns.

[@Jeff-tj4tx]

i'm not clear on why direct labor is a variable cost. i've worked for many companies where even the hourly employees always get their expected 40 hrs of pay regardless of activity level.

[@allkristiningram]

+Jeff a variable cost is defined as a calculated as rate times activity. If employees are paid $20 per hour times the number of hours worked, it is considered a variable cost. Direct labor workers are also entitled to overtime, where salary employees are not.

[@Jeff-tj4tx]

+Kristin Ingram thanks. great videos. :-)

[@allkristiningram]

+Jeff Thank you. Just remember that variable cost is more important once you start studying job costing because the way that variable and fixed costs are applied to those jobs is different.

[@arielchendra]

What happen if we don't Mixed Costs into Variable and Fixed Components?

[@allkristiningram]

then you can't accurately predict your future costs.