The city of Rockville reported the following annual cost data for maintenance work performed on its fleet of trucks.

Required

a. Use the four steps of the high-low method to estimate total fixed costs per year and the variable cost per mile. State your results in the cost equation form Y = f + vX. Round variable cost per unit to the nearest cent.

b. What would the estimated costs be if the trucks were driven 500,000 miles in year 7?

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Reporting Period Total (Year) Costs Level of Activity (Miles Driven) Year 1 $ 750,000 225,000 Year 2 850,000 240,000 Year 3 1,100,000 430,000 Year 4 1,150,000 454,000 Year 5 1,250,000 560,000 Year 6 1,550,000 710,000