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High-low method for a service company Sierra Railroad Inc. decided to use the high-low method and operating data from the past six months to estimate
High-low method for a service company Sierra Railroad Inc. 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 Sierra Railroad is "gross-ton miles," which is the total number of tons multiplied by the miles moved. Transportation Costs Gross-Ton Miles January $1,310,200 283,000 February 1,460,800 316,000 March 1,032,400 205,000 April 1,400,600 306,000 May 1,174,700 246,000 June 1,506,000 333,000 Determine the variable cost per gross-ton mile and the total fixed cost. Variable cost (If required, round to two decimal places.) $ Total fixed cost $18,000,000 X 1.75 X per gross-ton mile
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