Problem
Joyce Murphy runs a courier service in downtown Seattle. She charges clients $0.64 per mile driven. Joyce has determined that if she drives 2,750 miles in a month, her total operating cost is $875. If she drives 3,850 miles in a month, her total operating cost is $1,139.
Required:
1. Using the high-low method, determine Joyce's variable and fixed operating cost components. (Round your cost per unit answer to 2 decimal places.)
2. Complete the contribution margin income statement for Joyce's service assuming she drove 1,950 miles last month. (Assume this falls within the relevant range of operations).