10 THE HIGH-LOW METHOD USES ONLY TWO DUCTING VARIABLE EXPENSES TO OB...

5-10 The high-low method uses only two

ducting variable expenses to obtain contribution

points to determine a cost formula. These two

margin, and then deducting fixed expenses to

points are likely to be less than typical since

they represent extremes of activity.

obtain net operating income. The traditional ap-

proach organizes costs by function, such as pro-

duction, selling, and administration. Within a