High-Low Method for a Service CompanyBoston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed “gross-ton miles,” which is the total number of tons multiplied by the miles moved. Transportation CostsGross-Ton MilesJanuary$1,245,000 332,000 February1,388,100 371,000 March981,000 240,000 April1,330,800 359,000 May1,116,200 289,000 June1,431,000 390,000 Determine the variable cost per gross-ton mile and the total fixed cost.Variable cost (If required, round to two decimal places.)$fill in the blank 1per gross-ton mileTotal fixed cost$fill in the blank 2

Highest activity is seen in the month of February for an amount of $1,431,000 with gross-ton miles…

Answered: Determine the variable cost per…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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High-Low Method for a Service Company

Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed “gross-ton miles,” which is the total number of tons multiplied by the miles moved.

	Transportation Costs	Gross-Ton Miles
January	$1,245,000		332,000
February	1,388,100		371,000
March	981,000		240,000
April	1,330,800		359,000
May	1,116,200		289,000
June	1,431,000		390,000