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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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