Breaking Down Mixed Costs (High-Low Method) - Accounting

The video tutorial explains the Hilo method, a common algebraic approach used to separate variable and fixed cost components of a mixed cost. It involves four steps: identifying high and low activity levels, computing the unit variable cost (UVC) using a slope formula, calculating the fixed cost, and completing the cost equation in the form Y = MX + B. An example is provided to demonstrate the application of these steps, emphasizing the importance of focusing on activity levels rather than costs.

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