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High-Low Method. The city of Rockville reported the following annual cost data for maintenance work performed on its fleet of trucks. Reporting Period (Year) Total
High-Low Method.The city of Rockville reported the following annual cost data for maintenance work performed on its fleet of trucks.
Reporting Period (Year) | Total Costs | Level of Activity (Miles Driven) |
Year 1 | $750,000 | 225,000 |
Year 2 | 850,000 | 240,000 |
Year 3 | 1,100,000 | 430,000 |
Year 4 | 1,150,000 | 454,000 |
Year 5 | 1,250,000 | 560,000 |
Year 6 | 1,550,000 | 710,000 |
- Use the high-low method to estimate total fixed costs per year and the variable cost per mile. State your results in the cost equation form Y =f+vX.
- What would the estimated costs be if the trucks drove 500,000 miles in year 7?
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