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Tom Anderson tour company organizes East Coast tours for tourists using luxury buses. The following information about the operating costs of the tour buses are
Tom Anderson tour company organizes East Coast tours for tourists using luxury buses. The following information about the operating costs of the tour buses are provided below for part of the last fiscal year. Month Miles traveled by Operating cost for Tour buses tour buses July 16,100 $13,965 August 32,400 $17,250 September 18,250 $16,470 October 17,000 $15,420 November 32,500 $16,150 December 16,050 $14,176 150,000 Required: a) Use the high-low method to estimate the cost function for monthly operating cost for tour buses. b) Use the above cost function to predict the operating costs for the next fiscal year. The expected miles traveled for next year equals c) How will your answer to part (b) change if the management is expecting the following changes in costs for next fiscal year? Annual fixed costs are expected to increase by 10.00% Variable costs are expected to increase by 5.00%
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