Month Miles Driven Van Operating Costs January . . . . . . . . . . . . . 15,900

Question

Month Miles Driven Van Operating Costs January. . . . . . . . . . . . . 15,900 $5,430 February. . . . . . . . . . . . . . . . . 17,300 $5,740 March. . . . . . . . . . . . . . . 14,600 $4,940 April. . . . . . . . . . . . . . . . 16,300 $5,270 May. . . . . . . . . . . . . . . . . . . . . 17,200 $5,820 June. . . . . . . . . . . . . . . . . . . . . 15,200 $5,400 July. . . . . . . . . . . . . . . . 14,300 $4,990 ?Let's begin by determining the formula that is used to calculate the variable cost? (slope). / = Variable cost (slope) Now determine the formula that is used to calculate the fixed cost component. - = Fixed cost Use the? high-low method to determine Flowers 4 YouFlowers 4 You?'s operating cost equation. ?(Round the variable cost to the nearest cent and the fixed cost to the nearest whole? dollar.) y = $ x + $ Use the operating cost equation you determined above to predict van operating costs at a volume of 16 comma 00016,000 miles. The operating costs at a volume of 16,000 miles is $ . Month Miles Driven Van Operating Costs January. . . . . . . . . . . . . 15,900 $5,430 February. . . . . . . . . . . . . . . . . 17,300 $5,740 March. . . . . . . . . . . . . . . 14,600 $4,940 April. . . . . . . . . . . . . . . . 16,300 $5,270 May. . . . . . . . . . . . . . . . . . . . . 17,200 $5,820 June. . . . . . . . . . . . . . . . . . . . . 15,200 $5,400 July. . . . . . . . . . . . . . . . 14,300 $4,990 ?Let's begin by determining the formula that is used to calculate the variable cost? (slope). / = Variable cost (slope) / = Variable cost (slope) / = Variable cost (slope) Now determine the formula that is used to calculate the fixed cost component. - = Fixed cost - = Fixed cost - = Fixed cost Use the? high-low method to determine Flowers 4 YouFlowers 4 You?'s operating cost equation. ?(Round the variable cost to the nearest cent and the fixed cost to the nearest whole? dollar.) Flowers 4 YouFlowers 4 You?'s y = $ x + $ y = $ x + $ y = $ x + $ Use the operating cost equation you determined above to predict van operating costs at a volume of 16 comma 00016,000 miles. 16 comma 00016,000 The operating costs at a volume of 16,000 miles is $ . The operating costs at a volume of 16,000 miles is $ . The operating costs at a volume of 16,000 miles is $ . Month Miles Driven Van Operating Costs January. . . . . . . . . . . . . 15,900 $5,430 February. . . . . . . . . . . . . . . . . 17,300 $5,740 March. . . . . . . . . . . . . . . 14,600 $4,940 April. . . . . . . . . . . . . . . . 16,300 $5,270 May. . . . . . . . . . . . . . . . . . . . . 17,200 $5,820 June. . . . . . . . . . . . . . . . . . . . . 15,200 $5,400 July. . . . . . . . . . . . . . . . 14,300 $4,990

Explanation / Answer

Using the High Low Method: Miles Driven Expenses Cost Driver - Highest - Feb            17,300.00           5,740.00 Cost Driver - Lowest - July            14,300.00           4,990.00 Difference              3,000.00               750.00 Variable Cost (Slope) = Change in Cost / Change in Volume Variable Cost (Slope) = $750 / 3,000 Miles Variable Cost (Slope) = $0.25 per mile Fixed Cost = Total Cost - Total Variable Costs Fixed Cost = $5,740 - ($0.25 X 17,300 Miles) Fixed Cost = $1,415 The linear equation as Per High Low Method: Y = $0.25 x + $1,415 Operating Cost - 16,000 Miles = $0.25 X 16,000 Miles + $1,415 Operating Cost - 16,000 Miles = $4,000 + $1,415 Operating Cost - 16,000 Miles = $5,415

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