Crystal Clear Water Hauling wants to determine a fuel surcharge to add to its customers' bills based on the number of miles driven to each area. It wants to separate the fixed and variable portion of the truck's operating costs so it has a better idea of how distance affects these costs. Crystal Clear Water Hauling has the following data available.

-Using the high-low method, the monthly operating costs if Crystal Clear Water Hauling drives 18,000 miles in a month will be
A) $29,330
B) $11,330
C) $18,000
D) $36,500

Question

Crystal Clear Water Hauling wants to determine a fuel surcharge to add to its customers' bills based on the number of miles driven to each area. It wants to separate the fixed and variable portion of the truck's operating costs so it has a better idea of how distance affects these costs. Crystal Clear Water Hauling has the following data available.
 
-Using the high-low method, the monthly operating costs if Crystal Clear Water Hauling drives 18,000 miles in a month will be
A) $29,330 
B) $11,330 
C) $18,000 
D) $36,500

Quizplus · Accepted Answer

The high-low method calculates variable cost per mile and fixed costs using the highest and lowest activity levels. Using these, the total cost for 18,000 miles is calculated.

Crystal Clear Water Hauling Wants to Determine a Fuel Surcharge