High Low

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Leaving for exam in just under an hour and I can't remember the High Low thingy - can anyone help me????<BR><BR>PS Good luck to all.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    High Low

    Take the no of units at the highest point and the related cost, then take the no of units at the lowest and related cost, e.g<BR><BR>HIGH - 8,000 £115,000<BR>LOW - 6,000 - £97,000<BR><BR>DIFF = 2,000 £18,000<BR><BR>You then divide £18,000 by 2,000 which gives you £9.00 which is the varibale cost per unit.<BR><BR>You can then work out the fixed costs<BR><BR>Taking high first 8,000 x £9.00 = £72,000 £115,000 - £72.000 = £43,000 Fixed Cost<BR>Then take low for secondary check 6,000 x £9.00 = £54,000 £54,000 - 97,000 = £43,000 Fixed cost<BR><BR>Hope this helps and good luck
  • System
    System Posts: 100,534 🤖 Admin 🤖
    High Low

    Are the odds of this turning up in the exam high?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    High Low

    Bless You!!!!!!! Thanks very much!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    High Low

    Hi there,<BR><BR>With the High Low method you need to find the highest and the lowest levels of output and their associated costs.<BR><BR>Then calculate the difference between the highest output and the lowest output - giving the output difference.<BR>Then calculate the difference between the highest cost and the lowest cost - giving the cost difference.<BR><BR>Divide the cost DIFFERENCE by the output DIFFERENCE and this gives you the VARIABLE COST PER UNIT allowing you to go on and caluclate the fixed proproption.<BR><BR>If you pick one of the output levels and multiply the number produced by your variable cost per unit, this gives total variable cost. Deduct this from total cost to get the fixed element. Check you have done it correctly by applying this to another level of output, the fixed cost element should be the same for all outputs.<BR><BR>I hope this helps,<BR>Good luck!!!<BR>:-)

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