The High Low Method (for analyzing mixed costs in accounting)

This video explains how to use the High-Low Method to estimate the fixed and variable components of a mixed cost in accounting. An example is provided to demonstrate how the High-Low Method is used to calculate both the fixed cost and variable cost.
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thank you so much! you explained it in only 8 minutes something my professor couldn't in 3 hours!

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Glad it helped!

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Did you end up passing?

[@blessingakusobi6990]

Thank you! Thank you so much! I just tried to calculate the Fixed, Variable and Mixed Cost for the month of December. This is what I got. Fixed Cost= TC-VC therefore: 1) 2925-(3.18*300) 2) 2925-954= 1971 Fixed Cost 3) Mixed Cost for December= 1971+954=2925 Thank you for your amazing videos!!

[@garywagner7476]

Thank you for being so descriptive with your examples. You are helping a student who is blind successfully complete accounting. Thank you.

[@Edspira]

Wow, thank you! I'm glad you're completing accounting!

[@ellenlong5915]

Thank you for explaining this concept in a manner in which I can understand. I appreciate the step-by-step methods that you use to show how to work a problem. Thanks again.

[@rob8482]

Very helpful. Great presentation as always! I had to come back to this, and the change in cost, over the change in activity statement, was really well placed. It made sense to me, right then. I wish you covered our textbooks. You have an amazing gift. Thank you sir!

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I am currently learning this for ACCA level 1 and boy my lecturer is not understanding of the fact that I needed for to explain it for a second time.

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Great videos, very similar to what was covered in my class. 13 down 48 to go!

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you are simply the best! thank you so much

[@Will_022]

Thank you so much for this video, beautiful explanation.

[@usmc3218]

Thank you so much. Why, just why do professors seem unable to do this? I have been trying to get this for two weeks doing every example, going over notes and struggling with homework, and was very confused until I saw this. Thank you.

[@Edspira]

I'm glad this video was able to fill in the gaps from your class!

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[@Jsween876]

to find fixed cost is: Highest activity cost-(variable cost per unit X highest activity units) OR Lowest activity cost- (variable cost per unit X lowest activity units).

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Thank you!

[@Codashdee]

Thanks a lot Ed, you do good work.

[@Edspira]

Thanks!

[@angry2020]

Just amazing. Thank you so much!

[@Edspira]

I'm glad to hear this. Thanks for watching!

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Fantastic. Best of luck to you in your studies!

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[@bob992c]

Thank you so much!

[@Edspira]

+sagi CO No problem!

[@josephmbaabu6954]

Thanks, it was very clear

[@Edspira]

Awesome! Glad you liked it :)

[@reginamaeranariozipagan3405]

Hello, can I ask how can i determined the units if it is not given?

[@chrisweber759]

What do you guys think about people in their late 20s trying to go start an accounting degree?

[@carisiawattley4754]

Go for it. Your still young

[@AllAboutJailbreak]

Is the highest activity level data point the highest activity or the highest cost if two data points are identical otherwise? For example Cost: 100 activity: 100 units Cost: 90 activity: 110 units Cost: 80 activity: 50 Cost: 50 activity: 80 which one is the highest and which one the lowest data point?

[@NOSG1]

Thanks a lot man

[@Edspira]

Thanks for watching!

[@jarizminrivera5999]

Thank you! :)

[@Edspira]

+Jarizmín Rivera Happy to help! Hope you had a nice winter break!

[@ldpy33]

How do you calculate TC without FC using only VC and units?

[@ahmedyounes148]

Thank you so much (Y)

[@blankerhans9659]

Why are we taking the total costs of march and not for example for December to calculate the fixed costs?

[@yoshinegus4019]

(highest cost - lowest cost) / (highest activity - lowest activity)

[@annegexwy6455]

thanks!

[@Edspira]

You are very welcome!

[@shaniajoseph536]

How do you proceed if your highest until total cost was lower than your lowest unit total cost. Hence your difference being negative

[@Edspira]

Great question. The period in which you produce more units should have a higher cost associated with it compared to the period in which you produce the least amount of units. This number should never be negative in this calculation. Hypothetically, if you had a large fixed cost in a given month (such as a large machinery purchase) this expense would be capitalized and depreciated over multiple periods when using accrual accounting. Thus, the company should not have a large spike in any given month due to fixed costs.

[@ddxxjsjsja8330]

Ur a star

[@Edspira]

+Ddxx Jsjsja Thank you!

[@mariamqurbany2259]

how about you calculate "the mixed cost"?

[@nasseral-sahli6803]

If the variable cost equal $5850, what the new lowest activity level will be ?

[@christianemmanuelpicio2004]

So basically, mixed cost is the sum of FC and VC?

[@user-ep4fz6bl5x]

is the total cost the same thing as the mixed cost?

[@chrisweber759]

Summer Kamelle yes you can find the total mixed cost by adding the total variable and the total fixed cost

[@mariamqurbany2259]

no, and he didn't answer the title of the video properly. that sucked!

[@MedievalFantasy7393]

How to do this with inflation

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you don't

[@Merxifyful]

3.18x850 is 2703 not 2704

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[@johnnieniunimae3606]

Thanks alot