Question
Question 1: Calculating cost behaviour using the High-Low method. The new owner of Ranger Transport Ltd, a small transport company, wants to better understand the
Question 1: Calculating cost behaviour using the High-Low method.
The new owner of Ranger Transport Ltd, a small transport company, wants to better understand the costs incurred in doing business. One significant cost is the cost of operating forklifts for moving freight between trucks. The table below represents the total cost of forklift activity for each month of the previous year, together with the total forklift activities for each month.
Month
Forklift Cost
Number of activities
January
$2,210
100
February
$1,900
110
March
$2,780
175
April
$1,999
200
May
$7,500
490
June
$5,300
325
July
$3,800
250
August
$6,300
400
September
$7,250
520
October
$7,200
510
November
$7,500
500
December
$6,900
475
Using the High-Low method, perform the following tasks:
(a) Calculate the variable cost of forklift activities for the previous year
(b) Calculate the fixed cost of forklift activities for the previous year
(c) What would be the total cost of undertaking 310 forklift activities for the year?
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Accounting What The Numbers Mean
Authors: David Marshall, Wayne McManus, Daniel Viele
10th Edition
77729870, 9780077729875
