Anita Kaur runs a courier service in downtown Seattle. She charges clients $0.56 per mile driven. Anita has determined that if she drives 2,550 miles in a month, her total operating cost is $775. If she drives 3,650 miles in a month, her total operating cost is $951.

Required:

1. Using the high-low method, determine Anitas variable and fixed operating cost components.
2. Complete the contribution margin income statement for Anitas service assuming she drove 1,700 miles last month. (Assume this falls within the relevant range of operations).

Options for 2 Include:

Cost of Goods Sold

Fixed Costs

Gross Margin

Interest Expense

Net Operating After Taxes

Net Operating Income

Sales Revenue

Variable Costs