churvaness
churvaness
what are the usefulness of high low method
The high-low method is easy to use and understand because it involves selecting the highest and lowest activity levels and their respective costs to determine variable and fixed costs. This method is straightforward and does not require complex calculations, making it accessible even to those with limited accounting knowledge.
High and low method is the method for separating fixed cost and variable cost from mixed cost.
The fact that the high-low method uses only two data points is a major defect of the method.
The high-low method is a technique used to separate fixed and variable costs within a mixed cost. By comparing the highest and lowest activity levels and the corresponding total costs, this method allows you to estimate the fixed and variable components of a cost.
high-low method
Coness
The basic difference between the account analysis method and the high-low method in cost estimation lies in their approach to identifying fixed and variable costs. The account analysis method involves a detailed review of each account in the financial records to classify costs based on their nature, while the high-low method uses only the highest and lowest activity levels to estimate variable and fixed costs, making it simpler but potentially less accurate. The account analysis method provides a more comprehensive view, whereas the high-low method is quicker but may overlook variations within the data.
To find the average of the high and low values, you add the high value to the low value and then divide the sum by 2. The formula is: (high + low) / 2. This calculation gives you the midpoint or average of the two values. It’s a useful method for finding a central value between two extremes.
It ignores much of the available data by concentrating on only the extreme points.
low accuracy