In a manufacturing company, the high-low method is used to estimate the variable and fixed components of its production costs. By examining the cost at the highest level of production (200 units costing $5000) and the lowest level of production (100 units costing $3500), the company can determine the variable cost per unit and the total fixed cost.
Our finance team applied the high-low method to better understand how our production costs change with varying levels of output.
