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Please explain all the calculations step by step. Thank you. Martha LaChance, owner of Posies Unlimited, operates a local chain of floral shops. Each shop
Please explain all the calculations step by step. Thank you.
Martha LaChance, owner of Posies Unlimited, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, LaChance wants to set the delivery fee based on the distance driven to deliver the flowers. LaChance 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 ton to view the data.) Use the high-low method to determine the company's cost equation for van operating costs. Use your results to predict van operating costs at a volume of 17,000 miles. Lets 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 high-low method to determine Posies Unlimited's operating cost equation. (Round the variable cost to the nearest cent and the fixed cost to the nearest whole dollar.) 0.19 x +$ 2,025 Use the operating cost equation you determined above to predict van operating costs at a volume of 1 7 ,OOO miles. The operating costs at a volume of 17,000 miles is $ 5,255
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