Unified Parcel Inc, operates a local parcel delivery service. The company keeps detailed records relating to operating costs of trucks and has found that if a truck is driven 110,000 miles per year the operating cost is 7.5 cents per mile. This cost increases to 8.75 cents per mileif a truck is driven 60,000 miles per year.

Required (show all calculations):

Estimate the cost formula for truck operating costs using high-low method.

• Calculate the variable cost per mile
• Estimate the Fixed cost
• The cost formula

(Hint: use the table format below to determine the high-low method.

	Activity	Cost
High
Low
Change