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Kelly Smith, owner of Flower Paradise, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a
Kelly Smith, owner of Flower Paradise, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Smith wants to set the delivery fee based on the distance driven to deliver the flowers. Smith 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 Flower Paradise's cost equation for van operating costs. Use your results to predict van operating costs at a volume of 15,500 miles. Let's begin by determining the formula that is used to calculate the variable cost (slope). Data table Month + =Variable cost (slope) Miles Driven Van Operating Costs January... 15,800 $5,460 February ..... 17,300 $5,680 March 14,600 $4,940 April 16,000 $5,310 May 17,100 $5,830 June 15,400 $5,420 July 14,100 $4,880 Print Done
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