Question
Alice Rafferty, owner of Flower Petal, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat
Alice Rafferty, owner of Flower Petal, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Rafferty wants to set the delivery fee based on the distance driven to deliver the flowers. Rafferty wants to separate the fixed and variable portions of her van operating costs so that she has a better idea how delivery distance affects these costs. She has the following data from the past 7 months: (Click the icon to view the data.) February and May are always Flower Petal's biggest months because of Valentine's Day and Mother's Day, respectively. Use the high-low method to determine Flower Petal's cost equation for van operating costs. Use your results to predict van operating costs at a volume of 17,500 kilometres. Let's begin by determining the formula that is used to calculate the variable cost (slope). i Data Table = Variable cost (slope) Now determine the formula that is used to calculate the fixed cost component. Month Kilometres Driven Van Operating Costs = Fixed cost January 16,400 $5,480 Use the high-low method to determine Flower Petal's operating cost equation. (Round the variable cost to the nearest cent and the y = $ x + $ February 17,500 5,400 March 15,000 4,950 April 16,100 5,270 Use the operating cost equation you determined above to predict van operating costs at a volume of 17,500 kilometres. The operating costs at a volume of 17,500 kilometres is $ May 17,300 5,740 June 15,600 5,440 July 14,500 4,680
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