ssignments&takeAssignmentSession; nment-take8tinprogress false ms eBook Show Me
ID: 2541944 • Letter: S
Question
ssignments&takeAssignmentSession; nment-take8tinprogress false ms eBook Show Me How High-Low Method for a Service Company Boston Railroad decided to use the high-low transportation costs. The activity base used by tons multiplied by the miles moved method and operating data from the past six months to estimate the fixed and variable components of Boston Railroad is a measure of railroad operating activity, termed"gross-ton miles," which is the total number of Transportation Costs Gross-Ton Miles January February March April May June $865,400 964,900 681,900 925,100 775,900 336,000 218,000 326,000 262,000 354,000 ) Determine the variable cost pergross-ton mile and themed cost. per gross-ton mile Variable cost (Round to two decimal places.) Total fixed cost NextExplanation / Answer
SOLUTION
1. Variable cost per mile =
= (Cost at highest miles less Cost at lowest miles) / (Highest miles less Lowest miles)
= ($994,700 - $681,900) / (354,000 - 218,000)
= $312,800 / 136,000
= $2.3 per gross-ton mile
Fixed Cost=
= Total cost - variable cost
= $994,700 - ($2.3 * 354,000)
= $994,700 - $814,200
= $180,500
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