Question:
High-Low Method for Service Company
Blowing Rock 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 Blowing Rock Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved.
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Transportation Costs
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Gross-Ton Miles
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January
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$1,083,200
|
|
298,000
|
|
|
February
|
1,207,700
|
|
333,000
|
|
|
March
|
853,500
|
|
216,000
|
|
|
April
|
1,157,900
|
|
323,000
|
|
|
May
|
971,100
|
|
260,000
|
|
|
June
|
1,245,000
|
|
351,000
|
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Determine the variable cost per gross-ton mile and the fixed cost.
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Variable cost (Round to two decimal places.)
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$ per gross-ton mile
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Total fixed cost
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$
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