How is high low method of cost estimation utilized?

How is high low method of cost estimation utilized?
The high-low method of cost estimation is used in managerial accounting as a way to estimate variable and fixed cost rates for a specific cost (e.g. electricity bill). It utilizes information on costs from previous years of operation and takes the cost for the year with the highest volume and the cost of the year with the lowest volume and finds the slope between the two. This slope will then become your 'per unit variable cost' for the cost item. By writing the slope in y=mx+b form where y is your total cost, x is your production amount, and m being the slope (variable cost), you can then find the variable and fixed (represented by b) cost portions.

The advantage of this method is that it is easy to use and implement by managers. However, the method ignores the accuracy available with the data points from several years and attempts to summarize the cost behaviour of the cost item using just two year's costs (the year with the highest volume and the year with the lowest volume)

Here is an example concerning the electricity bill in a factory:
Year Units Produced Bill Cost
2000 50 units $100
2001 67 units $130
2002 20 units $70
2003 120 units $200
2004 88 units $104
2005 112 units $93

Under this situation, we take the year 2003 as our 'high' since it has the highest production volume and the year 2002 as our 'low' since it has the lowest production volume. By taking the slope of change in cost / change in unit volume, we get $130/100 units. Therefore our slope (variable cost) is $1.30 per unit produced. Plugging this value into either the 2002 or 2003 data, we find that $200 = $1.30(120 units) + b where b = $44.

Therefore, using the high low method, we conclude that from the above situation, the electricity cost behaviour has a fixed cost of $44 and a variable cost of $1.30 per unit produced.