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how can you determine fixed and variable cost without calculating the cost of every single item?

how can you determine fixed and variable cost without calculating the cost of every single item?

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Answer #1

By using highest & Lowest point method we can determine Variable Cost & Fixed cost without considering the Cost of every single item

By caluculating this We need two production level they normally caluculate as as Highest level & lowest Level, and also we need their respective costs.

Hc - Cost at Highest Level Of Production

Lc- Cost at lowel Level of Production

Hp- No.of units produced at highest level

Lp- No.of units produced at Lower level

Varible Cost ( VC)= Hc- Lc / Hp-Lp

Fixed Cost = Hc - Vc* Hp

By using above formula we can find Both variable & fixed cost

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