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Kathy Reynolds, owner of Flower Petal, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat
Kathy Reynolds, owner of Flower Petal, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Reynolds wants to set the delivery fee based on the distance driven to deliver the flowers. Reynolds 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 Flower Petal's cost equation for van operating costs. Use your results to predict van operating costs at a volume of 15,000 miles. Let's begin by determining the formula that is used to calculate the variable cost (slope). \begin{tabular}{lcc} \hline Month & Miles Driven & Van Operating Costs \\ \hline January & 15,900 & $5 , 430 \\ February & 17,300 & $5 , 740 \\ March & 14,600 & $4 , 940 \\ April & 16,300 & $5 , 270 \\ May & 17,200 & $5 , 820 \\ June & 15,200 & $5 , 400 \\ July & 14,300 & $4 , 990 \\ \hline \end{tabular}
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