Speedy Couriers documented the miles driven and total vehicle costs for the past five months as follows:
$$\begin{array} { l c c }
& \text { Number of miles } & \text { Total vehicle costs } \
\hline \text { January } & 800 & \$ 1095 \
\text { February } & 1000 & 1440 \
\text { March } & 750 & 1200 \
\text { April } & 900 & 1380 \
\text { May } & 1100 & 1410
\end{array}$$
-Using the high/low method,if Speedy expects to drive 1200 miles in June,what will be expected total vehicle costs?
A) $1470.00
B) $1515.00
C) $2056.50
D) $1720.88

Question

Speedy Couriers documented the miles driven and total vehicle costs for the past five months as follows:
$$\begin{array} { l c c } 
& \text { Number of miles } & \text { Total vehicle costs } \
\hline \text { January } & 800 & \$ 1095 \
\text { February } & 1000 & 1440 \
\text { March } & 750 & 1200 \
\text { April } & 900 & 1380 \
\text { May } & 1100 & 1410
\end{array}$$
-Using the high/low method,if Speedy expects to drive 1200 miles in June,what will be expected total vehicle costs?
A) $1470.00
B) $1515.00
C) $2056.50
D) $1720.88

Quizplus · Accepted Answer

The high/low method uses the highest and lowest activity levels to estimate variable and fixed costs. The highest miles are 1100 (May) and the lowest are 750 (March). The cost difference is $1410 - $1200 = $210, and the miles difference is 1100 - 750 = 350 miles. The variable cost per mile is $210 / 350 = $0.60. Using the low point, fixed costs are $1200 - (750 * $0.60) = $750. For 1200 miles, the cost is $750 + (1200 * $0.60) = $1470.00.

Speedy Couriers Documented the Miles Driven and Total Vehicle Costs