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Kale Reynolds, owner of Flower Hour, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat
Kale Reynolds, owner of Flower Hour, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Reynolds wants to set the delivery fee based on the distance driven o celiver the flowers, Reynolds wants to separate the fixed and variable portions of her van operating costs so that she has a beter idea how delivery distance affects these costs. She has the following data from the past seven months: (Click the icon to view the date.) Use the high-low method to determine Flower Hour's cost equation for van cperating costs. Use your results to predict van operating costs at a volume of 15,000 miles. Let's begin by determining the formula that is used to calculate the variable cost (slopei. -X Change in oost + Change in volume = Variable cost (slope) Data Table Now cetermine the formula that is used to calculate the fixed cost component. Total operating cost Total variable cost = Fixed cost Van Operating costs $5430 Use the high-low method to determine Flower Hour's operating cost equation (Round the variable cost to the nearest bent and the fixed cost to the nearest whole dollar.) $5,740 $4,940 Month Miles Driven January...... 15,900 February 17,300 March ....... 14,600 April .... 16,300 May .... 17,200 June 15,200 July ....... 14.300 $5 270 $6.820 55.400 $4.990 Print Done
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