High-Low Method: This method is used to determine the fixed as well as variable part of the mixed cost. The formula for calculation of variable cost per unit is as follows: Variable cost per unit = ( High Cost - Low Cost ) ( High units - low units ) Regression method: Least square regression method: It is a statistical procedure which is used to find the best fit for a set of data (points) by minimizing the sum of the residual points from the plotted curve. To state: The reason for difference between cost predictions based on high-low method and regression analysis and comment on their accuracy.

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Chapter 5, Problem 3.3GAP

To determine

Introduction:

High-Low Method:

This method is used to determine the fixed as well as variable part of the mixed cost. The formula for calculation of variable cost per unit is as follows:

Variable cost per unit = ( High Cost - Low Cost ) ( High units - low units )

Regression method:

Least square regression method:

It is a statistical procedure which is used to find the best fit for a set of data (points) by minimizing the sum of the residual points from the plotted curve.

To state:

The reason for difference between cost predictions based on high-low method and regression analysis and comment on their accuracy.

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