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Karen Tran, owner of Flower Mode, operates a local chain of fioral shops. Each shop has its own delivery van. Instead of charging a flat
Karen Tran, owner of Flower Mode, operates a local chain of fioral 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 EEB (Click the icon to view the data.) Use the high-low method to determine Flower Mode's cost equation for van operating 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 (slope). Data Table Change in cost Change in volume Variable cost (slope) Now determine the formula that is used to calculate the fixed cost component. Month Miles Driven 15,500 17,400 15,400 16,300 16,500 15,200 14,400 Van Operating Costs $5,390 $5,280 $4,960 $5,340 $5,450 $5,230 $4,680 Total operating cost Total variable cost Fixed cost January February March April May June July Use the high-low method to determine Flower Mode's operating cost equation. (Round the variable cost to the Print Done
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