Question

QUESTION 8 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 variable costs for 2018? $1.30 $1.60 $1.29 $2.00

Answer 1

Variable cost per unit=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)

=(225500-180,000)/(85000-50,000)

which is equal to

=$1.30