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Kara Tran, owner of Tulip Time, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a
Kara Tran, owner of Tulip Time, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Tran wants to set the delivery fee based on the distance driven to deliver the flowers. Tran 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: (Click the icon to view the data.) Use the high-low method to determine Tulip Time's cost equation for van operating costs. Use your results to predict van operating costs at a volume of 17,000 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 the high-low method to determine Tulip Time's operating cost equation. (Round the variable cost to the nearest cent and the fixed cost to the nearest whole dollar.) y = x + Data table Month Miles Driven Van Operating Costs January.. 15,500 $5,400 February. 17,500 $5,350 March 14,400 $4,980 April 16,400 $5,280 May 16,900 $5,580 June 15,300 $5,010 July 13,500 $4,590 Print Done
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