Jungemann

Jungemann, owner of Flower Mode

FlowerMode, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat deliveryfee, Jungemann

Jungemann wants to set the delivery fee based on the distance driven to deliver the flowers. Jungemann

Jungemann wants to separate the fixed and variable portions of her

her van operating costs so that she

she has a better idea how delivery distance affects these costs. She

She has the following data from the past sevenmonths:

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Use thehigh-low method to determine Flower Mode

FlowerMode's cost equation for van operating costs. Use your results to predict van operating costs at a volume of 15 comma 500

15,500 miles.

Let's begin by determining the formula that is used to calculate the variable cost(slope).

Change in cost

/

Change in volume

=

Variable cost (slope)

Now determine the formula that is used to calculate the fixed cost component.

Total operating cost

-

Total variable cost

=

Fixed cost

Use thehigh-low method to determine Flower Mode

FlowerMode's operating cost equation