Question
High-Low Method for a Service Company Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the
High-Low Method for a Service Company
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 | $639,600 | 301,000 | ||
February | 713,100 | 336,000 | ||
March | 504,000 | 218,000 | ||
April | 683,700 | 326,000 | ||
May | 573,500 | 262,000 | ||
June | 735,200 | 354,000 |
Determine the variable cost per gross-ton mile and the fixed cost.
Variable cost (Round to two decimal places.) | $ per gross-ton mile |
Total fixed cost | $ |
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Relevant Range and Fixed and Variable Costs
Vogel Inc. manufactures memory chips for electronic toys within a relevant range of 88,400 to 142,800 memory chips per year. Within this range, the following partially completed manufacturing cost schedule has been prepared:
Components produced | 88,400 | 109,200 | 142,800 |
Total costs: | |||
Total variable costs . . . . . . . . . | $33,592 | (d) | (j) |
Total fixed costs . . . . . . . . . . . . | 37,128 | (e) | (k) |
Total costs . . . . . . . . . . . . . . . . . | $70,720 | (f) | (l) |
Cost per unit: | |||
Variable cost per unit . . . . . . . | (a) | (g) | (m) |
Fixed cost per unit . . . . . . . . . . | (b) | (h) | (n) |
Total cost per unit . . . . . . . . . . | (c) | (i) | (o) |
Complete the cost schedule below. When computing the cost per unit, round to two decimal places. Round all other values to the nearest dollar.
Cost Report | ||||||
Components produced | 88,400 | 109,200 | 142,800 | |||
Total costs: | ||||||
Total variable costs | $33,592 | (d) | $ | (j) | $ | |
Total fixed costs | 37,128 | (e) | (k) | |||
Total costs | $70,720 | (f) | $ | (l) | $ | |
Cost per Unit | ||||||
Variable cost per unit | (a) | $ | (g) | $ | (m) | $ |
Fixed cost per unit | (b) | (h) | (n) | |||
Total cost per unit | (c) | $ | (i) | $ | (o) | $ |
Step by Step Solution
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