Bethany Link delivers parts for several local auto parts stores. She charges clients $1.73 per mile driven. She has determined that if she drives 1,400 miles in a month, her average operating cost is $1.53 per mile. If Bethany drives 2,800 miles in a month, her average operating cost is $0.90 per mile. Required: 1. Using the high-low method, determine Bethany's variable and fixed operating cost components. 2. Complete the contribution margin income statement for the business last month, when Bethany drove 1,540 miles. (Assume this falls within the relevant range of operations). Complete this question by entering your answers in the tabs below. Required 1 Required 2 Using the high-low method, determine Bethany's variable and fixed operating cost components. (Round your cost per unit answer to 2 decimal places.)

Bethany Link delivers parts for several local auto parts stores. She charges clients $1.73 per mile driven. She has determined that if she drives 1,400 miles in a month, her average operating cost is $1.53 per mile. If Bethany drives 2,800 miles in a month, her average operating cost is $0.90 per mile. Required: 1. Using the high-low method, determine Bethany's variable and fixed operating cost components. 2. Complete the contribution margin income statement for the business last month, when Bethany drove 1,540 miles. (Assume this falls within the relevant range of operations). Complete this question by entering your answers in the tabs below. Required 1 Required 2 Using the high-low method, determine Bethany's variable and fixed operating cost components. (Round your cost per unit answer to 2 decimal places.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Joyce Murphy runs a courier service in downtown Seattle. She charges clients $0.48 per mile driven. Joyce has determined that if she drives 3,400 miles in a month, her total operating cost is $1,004. If she drives 5,300 miles in a month, her total operating cost is $1,308. Joyce has used the high-low method to determine that her monthly cost equation is total monthly cost $460+ $0.16 per mile driven. Required: 1. Determine how many miles Joyce needs to drive to break even. 2. Calculate Joyce's degree of operating leverage if she drives 5,500 miles. 3. Suppose Joyce took a week off and her sales for the month decreased by 22 percent. Using the degree of operating leverage. calculate the effect this will have on her profit for that month. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate Joyce's degree of operating leverage if she drives 5,500 miles. Note: Round your intermediate calculations to 2 decimal places and final answer…
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