The high low method calculator works out variable cost per unit, total fixed cost and total cost from high cost, high unit volume, low cost, low unit volume and number of units (x). Enter what you have and the relationship is applied straight away, so you get the answer without working through the algebra yourself.
What Is the High Low Method Calculator?
The high low method calculator takes high cost, high unit volume, low cost, low unit volume and number of units (x) and turns them into variable cost per unit, total fixed cost and total cost.
It is the kind of calculation you would otherwise do on the back of an envelope: mechanical, repeatable and easy to get subtly wrong without noticing.
How the High Low Method Figure Is Built
Each result is calculated from the ones before it, so the working is fully visible. That matters when the answer is going to be quoted to somebody else and you need to be able to explain where it came from.
The figures are exactly as good as the assumptions underneath them. Check the rates, the periods and the tax treatment before you rely on the result.
Reading the Result Sensibly
A small change in an input can move the result by much more than you would expect, particularly where the calculation divides by one of the figures you supplied. That is worth understanding before you rely on a figure.
For anything that will be committed to, write the inputs down beside the result. A number you can reproduce is worth far more than one you cannot explain.
A Worked Example
Working through an example, with high cost set to 10, high unit volume set to 5, low cost set to 2, the calculator returns variable cost per unit of -0.08, and total fixed cost of 10.42, and total cost of 9.58. Substitute your own figures and the same steps produce the same kind of answer.
Frequently Asked Questions
What do I need to work out variable cost per unit?
Enter high cost, high unit volume, low cost, low unit volume and number of units (x). The calculator then works through the relationship and reports variable cost per unit, total fixed cost and total cost.
What does the high low method actually calculate?
It takes high cost, high unit volume, low cost, low unit volume and number of units (x) and converts them into variable cost per unit, total fixed cost and total cost using the standard relationship for this problem. Each step is applied in turn, so every output is traceable back to the numbers you typed in.
How should I enter high cost?
Use the value you actually have, in the unit shown next to the field. Enter every value in the same unit system. The calculator assumes the figures you supply are consistent, so it cannot correct a mistake that happens before the calculation starts.
Can I use this for a quick estimate as well as a precise answer?
Yes. The calculator is built for quick checks, so round your inputs to a sensible number of significant figures and the result will be just as useful. If you need more precision, keep the same method and add digits to the inputs rather than adjusting the method itself.
Is the answer exact?
It is as exact as the formula and the inputs allow. The method itself is the standard one for this problem, so the only sources of error are the figures you enter and the precision you ask for.