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Kara Coughlin, owner of Flowers 4 You, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a
Kara Coughlin, owner of Flowers 4 You, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Coughlin wants to set the delivery fee based on the distance driven to deliver the flowers. Coughlin wants to separate the fixed and variable portions of her van operating costs so that she has a better idea how delivery distance affects these costs. She has the following data from the past seven months: B (Click the icon to view the data.) Use the high-low method to determine Flowers 4 You's cost equation for van operating costs. Use your results to predict van operating costs at a volume of 16,500 miles. Let's begin by determining the formula that is used to calculate the variable cost (slope). = Variable cost (slope) Now determine the formula that is used to calculate the fixed cost component. Fixed cost Use the high-low method to determine Flowers 4 You's operating cost equation. (Round the variable cost to the nearest cent and the fixed cost to the nearest whole dollar.) y = X + Use the operating cost equation you determined above to predict van operating costs at a volume of 16,500 miles. The operating costs at a volume of 16,500 miles is Month Miles Driven Van Operating Costs $5,490 16,000 $5,700 January February ..... March ..... April. ... May 17,500 14,900 16,200 $4,910 $5,340 $5,820 16,900 June 15,100 $5,410 July 14,500 $4,920
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