High-Low Method Calculator

Estimate variable cost per unit and fixed cost using the high-low method. Predict cost at any activity level.

Use the High-Low Method Calculator

Enter highest and lowest activity levels and their total costs. Variable cost per unit, fixed cost, and predicted cost are calculated.

Data points

Highest and lowest activity level (units/hours) and their total costs. Variable cost per unit = (Cost_high − Cost_low) ÷ (Activity_high − Activity_low).

Highest activity

Total cost at high ($)

Lowest activity

Total cost at low ($)

Predict cost at activity level

Results

Variable cost per unit

$20

Fixed cost

$5,000

Predicted cost at activity

$19,000

Cost equation: Total cost = Fixed + (Variable per unit × Activity). High-low uses only two points; regression is more accurate with more data.

What this metric means

The high-low method splits total cost into fixed and variable components using two data points. You get a simple cost equation: Total = Fixed + (Variable per unit × Activity).

How to calculate it

Variable per unit = (Cost at high − Cost at low) ÷ (Activity high − Activity low). Fixed = Cost at high − (Variable per unit × Activity high). Then predict: Cost = Fixed + Variable × Activity.

How to improve the metric

Use more data points and regression for better estimates. Ensure high and low are representative (not outliers) and that the cost is roughly linear in activity.

Common mistakes

Using non-typical high/low periods; mixing different cost or activity definitions; or extrapolating far beyond the range of your data.

How to interpret your result

Use the cost equation for budgeting and breakeven. If predicted cost seems off, check that activity is the right driver and that the relationship is linear.

FAQs

What is the high-low method?▾

It uses the highest and lowest activity levels and their total costs to estimate variable cost per unit and fixed cost. Variable = (Cost_high − Cost_low) ÷ (Activity_high − Activity_low).

When is it useful?▾

When you have limited data (e.g. two points) and need a quick cost equation. Regression is more accurate with more data and when cost isn't strictly linear.

What activity measure should I use?▾

Use the driver that best explains cost: units produced, labour hours, machine hours, etc. Be consistent across high and low points.

Why might fixed cost be negative?▾

If the cost relationship isn't linear or the high/low points are outliers, the method can give odd results. Check your data and consider regression.

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Use the High-Low Method Calculator

Enter highest and lowest activity levels and their total costs. Variable cost per unit, fixed cost, and predicted cost are calculated.

Data points

Highest and lowest activity level (units/hours) and their total costs. Variable cost per unit = (Cost_high − Cost_low) ÷ (Activity_high − Activity_low).

Highest activity

Total cost at high ($)

Lowest activity

Total cost at low ($)

Predict cost at activity level

Results

Variable cost per unit

$20

Fixed cost

$5,000

Predicted cost at activity

$19,000

Cost equation: Total cost = Fixed + (Variable per unit × Activity). High-low uses only two points; regression is more accurate with more data.

FAQs

What is the high-low method?▾

It uses the highest and lowest activity levels and their total costs to estimate variable cost per unit and fixed cost. Variable = (Cost_high − Cost_low) ÷ (Activity_high − Activity_low).

When is it useful?▾

When you have limited data (e.g. two points) and need a quick cost equation. Regression is more accurate with more data and when cost isn't strictly linear.

What activity measure should I use?▾

Use the driver that best explains cost: units produced, labour hours, machine hours, etc. Be consistent across high and low points.

Why might fixed cost be negative?▾

If the cost relationship isn't linear or the high/low points are outliers, the method can give odd results. Check your data and consider regression.