High-Low Method Calculator (split mixed costs into fixed & variable)

Understanding the high-low method calculator — concept and principle

This calculator splits a mixed cost, such as utilities or maintenance, into a fixed part and a variable part using the high-low method. From a list of periods with activity and total cost, it picks the highest and lowest activity, finds the variable cost per unit and the fixed cost per period, and predicts total cost for a planned activity. Managerial accounting students and small-business owners use it for quick cost estimates.

Two points split the cost — with the default inputs: $34,941.67.

How it is calculated

Choose the periods with the highest and lowest activity (not the highest and lowest cost).
Variable cost per unit = (cost at high activity − cost at low activity) ÷ (high activity − low activity)
Fixed cost = total cost at either point − variable cost per unit × its activity
Predicted cost = fixed cost + variable cost per unit × planned activity

Enter one period per line: an optional label, then activity, then total cost. If two periods tie, the first listed is used.

The principle

A mixed cost behaves like a straight line: a fixed amount that is paid regardless, plus an amount that grows with activity. Two points are enough to define a line. The slope between the high and low activity points is the variable cost per unit, and the intercept is the fixed cost. Choosing points by activity, not cost, matters because activity is what drives the cost. The method is quick, but because it uses only two points, a single unusual month can distort the line.

Worked example

Defaults: six months; highest activity April (6,000 units, 38,900), lowest March (3,600 units, 29,400); planned activity 5,000.

Variable cost per unit = (38,900 − 29,400) ÷ (6,000 − 3,600) = 9,500 ÷ 2,400 = 3.9583.
Fixed cost = 38,900 − 3.9583 × 6,000 = $15,150.00.
Predicted cost at 5,000 = 15,150 + 3.9583 × 5,000 = $34,941.67.
High point: 6,000 and $38,900.00; low point: 3,600 and $29,400.00; periods entered: 6.

How to read the result

The cost equation Y = 15,150 + 3.96X lets you budget for any activity within the observed range. Check the other months against the line: here May at 4,800 units predicts about 34,150 against an actual 34,100, so the line fits well. If points scatter widely, use regression on all periods instead.

Common mistakes

Picking the highest and lowest cost instead of activity.
Predicting far outside the observed activity range.
Using a month with a one-off event as a high or low point.
Mixing periods of different length.

Keep in mind: The high-low method is an approximation. Least-squares regression uses all the data and is more reliable for decisions.

Frequently asked questions

Why use activity rather than cost to pick the points?

Activity drives the cost; choosing by cost could pick a month where cost was high for other reasons.

What is a better alternative to the high-low method?

Least-squares regression, which fits the line through all observations.

Can the fixed cost come out negative?

Yes, if the data are not linear or contain outliers. That is a sign the method does not fit.

Sources: OpenStax, Principles of Accounting, Volume 2: Managerial Accounting, section 2.3 "Estimate a Variable and Fixed Cost Equation and Predict Future Costs"

Checked 9 Nov 2026. High-low method (choose highest and lowest activity; variable cost = (Y₂ − Y₁)/(X₂ − X₁); fixed cost = total cost − variable cost × activity): OpenStax, “Principles of Accounting, Volume 2: Managerial Accounting”, section 2.3 “Estimate a Variable and Fixed Cost Equation and Predict Future Costs”.

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