High-Low Method for Service Company

Miss River 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 Miss River 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	$6,500,000				2,500,000
February	6,187,500				2,250,000
March	6,980,000				2,940,000
April	7,500,000				3,400,000
May	8,775,000				4,500,000
June	8,200,000				4,000,000

Determine the variable cost per gross-ton mile and the fixed costs. Round variable cost per unit to the nearest cent.

Variable cost	$_________ per gross-ton mile
Fixed cost	$_________