High-low method: High-low method is a method of calculating the variable cost and the fixed cost of a product or service. The calculation of this method is based on the total production/activity cost and the lowest production/activity cost of the product during any period. Variable Cost: Variable cost is a cost that changes when the volume of production changes in the same direction and in the same proportion. Fixed Cost: Fixed cost is a cost that remains constant irrespective of changes in the production volume. Determine the following: Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. Express the variable and fixed costs in the form The total cost incurred if a truck were driven 80,000 kilometers during a year.

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Chapter 2, Problem 8E

To determine

High-low method: High-low method is a method of calculating the variable cost and the fixed cost of a product or service. The calculation of this method is based on the total production/activity cost and the lowest production/activity cost of the product during any period.

Variable Cost: Variable cost is a cost that changes when the volume of production changes in the same direction and in the same proportion.

Fixed Cost: Fixed cost is a cost that remains constant irrespective of changes in the production volume.

Determine the following:

Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation.

Express the variable and fixed costs in the form

The total cost incurred if a truck were driven 80,000 kilometers during a year.

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