Question

QUESTION 10 Really Fast Delivery Services has collected the following information about operating expenditures for its delivery truck fleet for the past five years: Year Miles Operating costs 2013 55,000 $195,000 2014 70,000 $210,000 2015 50,000 $180,000 2016 65,000 $205,000 2017 85,000 $225,500 Using the high-low method, what is the cost estimate for fixed costs for 2018? $115,000 $100,000 $115,500 $114,500

Answer 1

Ans: calculation of variable cost using high low Method variable cost = Higher Miles Cost - Lower Miles cost Higher Miles-Lower Miles = $ 225, 500 - $ 180,000 85000 -50,000 = $ 45,500 35000 = $1.3 per Mile Total fixed cost = Total higher mile cost ☺ variable cost $225, 500 @ (85000* $1»3) $225, 500 110500 = $ 115000

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