You are asked to compose a brief memorandum (executive summary) describing your conclusions. You are asked to provide support for your memorandum in the form of numerical or other data.

Learning Objective: Describe and illustrate the role, purpose and financial rational for the High Low Method.

1. Describe the definition and behavior of a variable and fixed cost in a manufacturing business's income statement.

2. Explain the definition of a mixed cost and provide two examples in a manufacturing business's income statement.

3. Explain what the key elements/factors are required in the High Low Method formula.

4. How does the High Low Method and Formula assist Business?