Thomas, Ltd., provides nationwide passenger train service on 21,000 miles of routes. Selected operating data for fiscal
Question:
Thomas, Ltd., provides nationwide passenger train service on 21,000 miles of routes. Selected operating data for fiscal 2014 are shown below.
Required
a. The above data provide three possible activity measures that could influence fuel expense.
Use the high-low method to develop a cost formula for fuel expense for each of the three measures.
b. Do any of the cost formulas you developed in (a) appear to be a poor choice for estimating future train operations expense? Why?
c. Which formula do you think will make the most accurate predictions?Why?
Transcribed Image Text:
Fuel Expense Passengers Passenger Train Miles Month October 2013 November 2013 December 2013 January 2014 (000s) $22,037 $22,435 7 2 ay 4 September 2014 $25,021
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a Passengers Variable cost 254592222524302136 11 per passenger Fixed cost 25459 11 2430 1271 Fuel ex...View the full answer
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