Question

High-Low Method for a Service Company

Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved.

	Transportation Costs		Gross-Ton Miles
January	$999,300		285,000
February	1,114,100		318,000
March	787,400		206,000
April	1,068,200		308,000
May	895,900		248,000
June	1,148,600		335,000

Determine the variable cost per gross-ton mile and the total fixed cost.

Variable cost (Round to two decimal places.)	$ per gross-ton mile
Total fixed cost	$

Answer 1

Dosto Vouable costa (ligh Cost- low cost) /high miles - Love Miles) Varáble Coast -(6-1,148,600 – 787,400) | 6335,000-206,000) $361,200/ 129,000 $2.8 per guaston mile d. Variable cost = 206, oro miley X 8208 $ 5761800 2. Total fixed cost a Total cost - Variable cost $787,400 - ( 206,000 miles in March X $208) 210,600 - $