High-low method for a service company OBJ. 1 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 $1,776,000 560,000 February 2,700,000 1,000,000 March 1,650,000 500,000 April 1,860,000 600,000 May 1,440,000 400,000 June 1,566,000 460,000 Determine the variable cost per gross-ton mile and the total fixed cost.