High-low method to separate fixed and variable overhead costs Steps:

• Identify low activity level (10,000 units, $20,000 total overhead) and high activity level (20,000 units,$22,000 total overhead).
• Calculate variable overhead per unit: ($22,000 -$20,000) / (20,000 - 10,000) = $2,000 / 10,000 =$0.20 per unit.
• Calculate total variable overhead at low level: $0.20 × 10,000 =$2,000.
• Subtract total variable from total overhead at low level: $20,000 -$2,000 = $18,000 fixed overhead.

Why C is correct:

• The high-low method isolates fixed costs using the formula F = total low - (change in total / change in units × low units), yielding the constant cost independent of output volume.

Why the others are wrong:

• A. $16,000 is the change in total overhead, representing variable costs, not fixed.
• B. $48,000 results from erroneously applying the variable rate across triple the output change.
• D. $21,600 is the total overhead at high output, including both fixed and variable components.

Final answer: C