Trying to solve imagined situation. Have highest and lowest sales quantity and have personnel expenses that are mixed expenses (part is fixed wages; part variable wages - amount depends on sales quantity). And want to calculate amount of fixed and variable wages (split mixed expenses into fixed and variable).
|Personnel expenses (mixed; includes fixed and variable)||300||500|
Simple method is highest - lowest method, example here https://www.investopedia.com/terms/h/high-low-method.asp
Units: Sales quantity Costs: Personnel expenses
Variable Cost = (Highest Activity Costs - Lowest Activity Costs) / (Highest Activity Units - Lowest Activity Units) Variable Costs = (500 - 300) / (2400 - 1700) Variable Costs = 200 / 700 Variable Costs = .28 Fixed Costs = Highest Activity Costs − (Variable Cost × Highest Activity Unit) Fixed Costs = 500 - (.28 * 2400) Fixed Costs = -172
Why such situation? A bit mess in my head...
After some tests conclusion is if sales quantity max/min rate (2400/1700) is less than personnel expenses max/min rate, then the formula does not work (shows incorrect variable cost amount per unit).