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Unformatted text preview: ght-line relationship
usually exists for both _____________________. Chapter
5-15 Mixed Costs
Costs that have
Sometimes called semivariable cost.
Change in total
with changes in
Mixed Costs: High–Low Method
For purposes of Cost-Volume-Profit (CVP)
Cost-Volumeanalysis, mixed costs must be classified into their
fixed and variable elements.
One approach to separate the costs is called the high-low method. Uses the total costs incurred at the high and low
levels of activity to classify mixed costs into
fixed and variable components. The difference in costs between the high and low
levels _______________________, since only
variable costs change as activity levels change.
5-17 Mixed Costs:
Steps in High–Low-Method
High–LowSTEP 1: Determine variable cost per unit using the
following formula: STEP 2: Determine the fixed cost by subtracting
the total variable cost at either the high
or the low activity level from the total cost
at that level.
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- Winter '14