Question
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
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 | $996,000 | 221,000 | ||
| February | 1,110,500 | 247,000 | ||
| March | 784,800 | 160,000 | ||
| April | 1,064,700 | 239,000 | ||
| May | 892,900 | 192,000 | ||
| June | 1,144,800 | 260,000 | ||
Determine the variable cost per gross-ton mile and the total fixed cost.
| Variable cost (Round to two decimal places.) | $fill in the blank 1 per gross-ton mile |
| Total fixed cost | $fill in the blank 2 |
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