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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) $

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