Mixed costs can be separated into their variable and fixed components by using

• the high-low method, which considers the change in cost between the highest and lowest activity levels in the data set (excluding outliers) and de- termines a variable cost per unit based on that change; fixed cost is then determined by sub¬ tracting total variable cost at either the highest or lowest activity level from total cost at that level.

• regression analysis, which uses the costs and ac¬ tivity levels in the entire data set (excluding out¬ liers) as input to mathematical formulas that allow the detennination first of variable cost and, sub¬ sequently, of fixed cost.

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