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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 | $1,157,000 | 272,000 | ||
| February | 1,290,000 | 304,000 | ||
| March | 911,700 | 197,000 | ||
| April | 1,236,800 | 294,000 | ||
| May | 1,037,300 | 237,000 | ||
| June | 1,329,900 | 320,000 | ||
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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