Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output

Speedy Petes is a small start-up company that delivers high-end coffee drinks to large metropolitan office buildings via a cutting-edge motorized coffee cart to compete with other premium coffee shops. Data for the past 8 months were collected as follows:

Month, Delivery cost, number of deliverys

May, $63,450, 1,800

June, 67,120, 2,010

July, 66,990, 2,175

August, 68,020, 2,200

September, 73,400, 2,550

October, 72,850, 2,630

November, 75,450, 2,800

December, 73,300, 2,725

Assume that this information was used to construct the following formula for monthly delivery cost.

Total Delivery Cost = $41,850 + ($12.00 Number of Deliveries)

Assume that 3,000 deliveries are budgeted for the following month of January. Use the total delivery cost formula for the following calculations:

1. Calculate total variable delivery cost for January. $

2. Calculate total delivery cost for January. $