Unified Parcel Inc, operates a local parcel delivery service. The company keeps detailed records relating to operating
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Question:
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 |
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