• Urban Transit Corporation operates a bus fleet and wants to understand its maintenance cost behavior related to mileage driven.
• Data:
  • Year 2018: Total Costs: $1,200,000, Miles Driven: 600,000
  • Year 2019: Total Costs: $1,450,000, Miles Driven: 750,000
• Required:
  • Employ the High-Low Method to compute the variable cost per mile and the fixed costs.
  • Construct the cost equation for maintenance costs.
  • Predict the total costs if the fleet drives 800,000 miles.

Assess how a 10% increase in mileage would impact maintenance costs.