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Melody Leigh, owner of Broadway Floral, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a
Melody Leigh, owner of Broadway Floral, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Leigh wants to set the delivery fee based on the distance driven to deliver the flowers. Leigh 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 Broadway Floral's cost equation for van operating costs. Use your results to predict van operating costs at a volume of 16,500 miles. Let's begin by determining the formula that is used to calculate the variable cost (slope). = Variable cost (slope) Data table Now determine the formula that is used to calculate the fixed cost component. Month Miles Driven Van Operating Costs = Fixed cost January. 15,500 $5,390 February 17,400 $5,280 Use the high-low method to determine Broadway Floral's operating cost equation. (Round the variable cost to the ne March 15,400 $4,960 y = X+ April 16,300 $5,340 Use the operating cost equation you determined above to predict van operating costs at a volume of 16,500 miles. May 16,500 $5,450 June 15,200 $5,230 The operating costs at a volume of 16,500 miles is July 14,400 $4,680 Print Done -
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