Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Kristen Battle, owner of Flower Mode, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat
Kristen Battle, owner of Flower Mode, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Battle wants to set the delivery fee based on the
distance driven to deliver the flowers. Battle 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 highlow method to determine Flower Mode's cost equation for van operating costs. Use your results to predict van operating costs at a volume of 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 highlow method to determine Flower Mode's operating cost equation. Round the variable cost to the nearest cent and the fixed cost to the nearest whole dollar.
Data table
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started