Miss River Railroad decided to use the high-low method and operating data from the past six months
Question:
Miss River 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 Miss River 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 .................$6,500,000............................... 2,500,000
February ...............6,187,500................................ 2,500,000
March ..................6,980,000................................ 2,940,000
April ................... 7,500,000 ............................... 3,400,000
May .................... 8,775,000 ............................... 4,500,000
June ................... 8,200,000 ................................ 4,000,000
Determine the variable cost per gross-ton mile and the fixed costs?
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