CHAPTER 3 High Low Method Forecasting a Mixed Cost
In Class Work Page 93				Anderson Company
HIGH-LOW METHOD
Materials	Cost				# of Moves
January	$ 2,000				100
February	$ 3,090				125
March	$ 2,780				175
April	$ 1,990				200
May	$ 7,500				500
June	$ 5,300				300
July	$ 3,800				250
August	$ 6,300				400
Sept	$ 5,600				475
October	$ 6,240				425
FYI: Total Cost=Total Fixed Cost +(Variable Rate * Activity)
Step 1. Find the High Low Activity for the data set
Step 2. Estimate the Variable Rate per unit using the High Low data
VARIABLE RATE	=	High Activity Cost-Low Activity Cost
		High Activity-Low Activity
	=		=
Step 3. Estimate the fixed cost component using high point data
Fixed Cost= Total Cost at High Point - (Variable Rate X Activity at High Point)
Step 4: Form the cost formula for materials handling
Total Cost = Fixed Cost from Step 3 + (Variable Rate from step 2 * #of moves)
Step 5. Estimate the material handling cost for November based on 350 moves
Use your Formula created in step 4 to solve. Show your work.