Joyce Murphy runs a courier service in downtown Seattle. She charges clients $0.62 per mile driven. Joyce has determined that if she drives 2,450 miles in a month, her total operating cost is $725. If she drives 3,550 miles in a month, her total operating cost is $857. Required: 1. Using the high-low method, determine Joyce's variable and fixed operating cost components. 2. Complete the contribution margin income statement for Joyce's service assuming she drove 1,600 miles last month. (Assume this falls within the relevant range of operations).
Joyce Murphy runs a courier service in downtown Seattle. She charges clients $0.62 per mile driven. Joyce has determined that if she drives 2,450 miles in a month, her total operating cost is $725. If she drives 3,550 miles in a month, her total operating cost is $857. Required: 1. Using the high-low method, determine Joyce's variable and fixed operating cost components. 2. Complete the contribution margin income statement for Joyce's service assuming she drove 1,600 miles last month. (Assume this falls within the relevant range of operations).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Joyce Murphy runs a courier service in
downtown Seattle. She charges clients $0.62
per mile driven. Joyce has determined that if she
drives 2,450 miles in a month, her total
operating cost is $725. If she drives 3,550 miles
in a month, her total operating cost is $857.
Required:
1. Using the high-low method, determine
Joyce's variable and fixed operating cost
components.
2. Complete the contribution margin income
statement for Joyce's service assuming she
drove 1,600 miles last month. (Assume this falls
within the relevant range of operations).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd1a1f8fd-52df-4984-b9a5-89d90026fb07%2Ff76750c0-0662-4a0b-a100-3c35686154c0%2Ft1hdles_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Joyce Murphy runs a courier service in
downtown Seattle. She charges clients $0.62
per mile driven. Joyce has determined that if she
drives 2,450 miles in a month, her total
operating cost is $725. If she drives 3,550 miles
in a month, her total operating cost is $857.
Required:
1. Using the high-low method, determine
Joyce's variable and fixed operating cost
components.
2. Complete the contribution margin income
statement for Joyce's service assuming she
drove 1,600 miles last month. (Assume this falls
within the relevant range of operations).
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