Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed image text in transcribed

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}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting Volume 1 Chapters 1 To 12

Authors: J. David Spiceland, James F. Sepe, Lawrence A. Tomassini, Mark W. Nelson

5th Edition

0073324655, 9780073324654

More Books

Students also viewed these Accounting questions

Question

Explain all drawbacks of application procedure.

Answered: 1 week ago