Calculator inputs
Enter the highest and lowest activity observations with their total costs. Add an optional target activity to estimate total mixed cost.
Example data table
This sample shows monthly production activity and total overhead cost. The high-low method uses the highest and lowest activity levels only.
| Month | Units Produced | Total Overhead Cost | Note |
|---|---|---|---|
| January | 600 | $9,200 | Lowest activity point |
| February | 780 | $10,500 | Normal activity |
| March | 920 | $11,400 | Normal activity |
| April | 1,060 | $12,500 | Normal activity |
| May | 1,220 | $13,600 | Normal activity |
| June | 1,400 | $14,800 | Highest activity point |
Formula used
The high-low method splits mixed cost into variable and fixed portions by comparing the highest and lowest activity levels.
(High Total Cost − Low Total Cost) ÷ (High Activity − Low Activity)
High Total Cost − (Variable Cost per Activity Unit × High Activity)
Fixed Cost + (Variable Cost per Activity Unit × Target Activity)
Worked example:
Variable Cost = ($14,800 − $9,200) ÷ (1,400 − 600) = $5,600 ÷ 800 = $7.00
Fixed Cost = $14,800 − ($7.00 × 1,400) = $14,800 − $9,800 = $5,000
Estimated Cost at 1,000 units = $5,000 + ($7.00 × 1,000) = $12,000
How to use this calculator
- Enter a label for the high activity point.
- Enter a label for the low activity point.
- Choose the activity name, such as units or hours.
- Input the highest activity and its total cost.
- Input the lowest activity and its total cost.
- Add an optional target activity for a forecast.
- Select your currency symbol and decimal preference.
- Click calculate to see fixed cost, variable rate, and graph.
- Use the CSV or PDF buttons to export results.
Frequently asked questions
1) What does the high-low method do?
It estimates variable cost per activity unit and fixed cost from mixed cost data. It compares only the highest and lowest activity observations.
2) Why does this method use activity extremes?
The method assumes the change between the highest and lowest activity points best shows the variable portion of cost. It is quick and simple.
3) What is fixed cost in this calculator?
Fixed cost is the portion that stays constant within the relevant range. It remains even when activity changes, such as rent or supervisor salaries.
4) Can I estimate total cost for a future activity level?
Yes. Enter an optional target activity. The calculator applies the equation Fixed Cost + Variable Rate × Activity to estimate total mixed cost.
5) Why do both fixed cost checks usually match?
They should match because the same variable rate is applied to both extreme points. Small differences can appear only from rounding choices.
6) When should I avoid the high-low method?
Avoid it when data includes unusual outliers, seasonal distortions, or inconsistent cost behavior. In those cases, regression analysis usually gives a better estimate.
7) Can service businesses use this calculator?
Yes. Service firms can use calls handled, labor hours, client visits, or any consistent activity measure that reasonably drives total cost.
8) What activity unit should I enter?
Use the same driver across both points and forecasts. Common examples include units produced, machine hours, labor hours, deliveries, or service jobs.