Johnson Trucking Company 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.Johnson Trucking Company has the following data available.

The variable cost per mile using the high-low method is

Question

Johnson Trucking Company 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.Johnson Trucking Company has the following data available.

The variable cost per mile using the high-low method is

Quizplus · Accepted Answer

B)
Highest cost $24,150 Highest activity 18,200
Lowest cost $22,050 Lowest activity 15,400
Difference $2,100 2,800
NOW divide the difference in the cost by the difference in the activity equals Variable cost per unit.$2,100/ 2,800 = $ .75

Johnson Trucking Company Wants to Determine a Fuel Surcharge to Add