Speedy Parcel Service operates a fleet of delivery trucks in a large metropolita

Question

Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful study by the company%u2019s cost analyst has determined that if a truck is driven 165,000 miles during a year, the average operating cost is 12.9 cents per mile. If a truck is driven only 110,000 miles during a year, the average operating cost increases to 16.2 cents per mile.

Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation

Here is my answer but it is not correct according to the websire

1. .129/mile * 165000 miles = 21285 total cost

2. .162/mile * 110000 miles = 17820 total cost

3. 21285 tc - 17820 tc = 3465 difference in total cost

4. 165000 mi - 110000 mi = 55000 difference in total miles

5. 3465 cost difference / 55000 miles difference = .063 vc per mile

6. 21285 total cost (from step 1) - 3465 variable cost (from step 5) = 17820 fixed cost

7. 17820 fixed cost / 165000 miles = .108 fc per mile

Is this correct?

Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful study by the company%u2019s cost analyst has determined that if a truck is driven 165,000 miles during a year, the average operating cost is 12.9 cents per mile. If a truck is driven only 110,000 miles during a year, the average operating cost increases to 16.2 cents per mile.

Explanation / Answer

First at .116 per mile the total cost at 120,000 = 13,920 At .136 per mile, the total cost at 80,000 = 10,880 With high low, you subtract the low from the high $13,920 - $10,880 = $3,040 120,000 - 80,000 = 40,000 $3,040 / 40,000 = $.076 this is the vc per mile At 120,000 miles x .076 = 9,120 The total cost is 13,920 and the vc is 9120 so the fc is 4,800 At 80,000 x .076 = 6,080 Total cost is 10,880 and the vc is 6080 so fc is 4800

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