WERCAM OPTIMIZED https//blackb Remaining Time: 1 hour, 56 minutes, 08 seconds. O
ID: 2575846 • Letter: W
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WERCAM OPTIMIZED https//blackb Remaining Time: 1 hour, 56 minutes, 08 seconds. Onestion Completion Status QUESTION 3 2 points Save The Apolio Delivery Service has the following information about its truck Beet mles and operating costs Year 2011 2012 2013 Miles 50,000 300,000 50,000 5160.000 175,000 $215,000 Using the high-low method, what is the best estmate of total costs for feet operating expenses when they expect to drive 325,000 mles? $22,500 $195,000 $195,750 o $201,250 2 points Save Answer Wesley's income statement is as follows S8D 000 Sales (10 000 unts) ace F6 F7 8. 0Explanation / Answer
3Using High-low method
Variable cost per mile = (Highest operating cost-Lowest operating costs)/(Highest miles-Lowest miles)
Variable cost per mile = ($215,000-$160,000)/(350,000-250,000) = $55,000/100,000 miles = $0.55 per mie
Fixed cost = Total operating cost at 350,000 miles - Variable cost at 350,000 miles
Fixed costs = $215,000-(350,000miles *$0.55) = $22,500
Variable cost at 325,000 miles = $0.55 * 325,000 miles = $178,750
Total cost at 325,000 miles = $178,750 + $22,500 + $201,250
Hence, correct answer is $201,250
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