Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Mel Cheek is a fishing guide on the Chenega River. The fish are usually found 20 to 50 miles upriver. Once the fish are located,

Mel Cheek is a fishing guide on the Chenega River. The fish are usually found 20 to 50 miles upriver. Once the fish are located, Mel slows the boat to trolling speed and fishes for about 6 hours before returning to dock. Mel has noted that overall fuel costs vary based on "miles upriver" and he is considering changing his guide fee to separately charge customers for estimated fuel costs. Below is Mel's log for 15 typical days showing "miles upriver to locate fish" and "total fuel cost".

Day Miles Upriver Fuel Cost

1 37 $88

2 41 96

3 22 75

4 28 81

5 49 101

6 25 77

7 33 89

8 37 81

9 44 95

10 24 77

11 29 80

12 45 96

13 35 85

14 36 87

15 31 80

Total 516 $1,288

(a) Use the high-low method to determine the "fixed fuel cost" associated with the trolling time, and

the "variable fuel cost" associated with running up and down the river.

A.

3(a) Variable cost per mile upriver

$0.96

3(a) Fixed Cost

$53.81

B.

3(a) Variable cost per mile upriver

$1.90

3(a) Fixed Cost

$53.88

C.

3(a) Variable cost per mile upriver

$2.93

3(a) Fixed Cost

$53.66

D.

3(a) Variable cost per mile upriver

$0.56

3(a) Fixed Cost

$23.81

E.

3(a) Variable cost per mile upriver

$0.31

3(a) Fixed Cost

$53.12

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions