When using the high-low method, total fixed cost is found by calculating the intercept point of the sloped line on the vertical axis.

Question

Quizplus · Accepted Answer

This is correct. The high-low method uses the two data points with the highest and lowest activity levels to calculate a slope, which represents the variable cost per unit of activity. The fixed cost is then determined by subtracting the variable cost per unit from the total cost at either data point. This fixed cost is then represented by the intercept point of the sloped line on the vertical axis.

When Using the High-Low Method, Total Fixed Cost Is Found