2. EX.20.08.ALGO

High-Low Method for a Service Company

Continental 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 Continental 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	$1,024,500		356,000
February	1,142,300		398,000
March	807,300		258,000
April	1,095,200		385,000
May	918,500		310,000
June	1,177,600		419,000

Determine the variable cost per gross-ton mile and the total fixed cost.