Input Observations
| Period/Label | Activity Units (X) | Total Cost (Y) | Notes | Actions |
|---|
Example Dataset
| Period | Units | Total Cost |
|---|
Formula Used
The high‑low method isolates variable and fixed components of mixed cost using only the highest and lowest activity observations.
- b = (Yhigh − Ylow) / (Xhigh − Xlow) Variable cost per unit
- a = Yhigh − b·Xhigh Fixed cost
- Cost Function: ŷ = a + b·X
Where X is the activity level and Y is the total cost.
Assumption: The relationship is approximately linear within the relevant range of activity.
How to Use
- Enter at least two observations with activity units and total costs.
- Click Compute High‑Low to calculate variable rate, fixed cost, and equation.
- Optionally set decimals, currency symbol, and a target activity to forecast.
- Review the chart showing the observations and fitted high‑low line.
- Export your dataset and results to CSV or PDF for reporting.
FAQs
It’s a quick technique to split mixed cost into fixed and variable parts using only the two extreme activity observations.
Use it for fast estimates when detailed regression isn’t available, the cost‑activity relationship is roughly linear, and extreme points are representative.
Consider reviewing data quality or using methods that leverage all observations, like ordinary least squares regression.
Yes. Enter a target X and the calculator returns predicted total cost using the fitted cost function.
Choose decimals based on reporting precision. Financial summaries often use two to four decimal places for variable rates.
Results
- Variable cost / unit (b)
- —
- Fixed cost (a)
- —
- Cost function
- ŷ = a + b·X
- High point used
- —
- Low point used
- —
- Predicted at X
- —