Chapter 3, Problem 28BEB

Brief Exercise 3-28 Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period that Differs from the Data Period

Refer to the information for Speedy Pete’s on the previous page. Assume that this information was used to construct the following formula for monthly delivery cost.

$\text{Total Delivery Cost = }\$41,850+(\$12.00\times \text{Number of Deliveries)}$

Required:

Assume that 3,000 deliveries are budgeted for the coming year. Use the total delivery cost formula to make the following calculations:

1. 1. Calculate total variable delivery cost for the coming year.
2. 2. Calculate total fixed delivery cost for the year.
3. 3. Calculate total delivery cost for the year.

Use the following information for Brief Exercises 3-26 through 3-29:

Speedy Pete’s is a small start-up company that delivers high-end coffee drinks to large metropolitan office buildings via a cutting-edge motorized coffee cart to compete with other premium coffee shops. Data for the past 8 months were collected as follows: