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.

Using the high-low method,the monthly operating costs if Johnson Trucking Company drives 20,000 miles in a month will be

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.

Using the high-low method,the monthly operating costs if Johnson Trucking Company drives 20,000 miles in a month will be

Quizplus · Accepted Answer

C)
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
Put the numbers into the Cost Equation: $24,150 = $0.75 (18,200)+ f
$10,500 = f
Finally y = $ 0.75 (20,000)+ $10,500
y = $25,500

Johnson Trucking Company Wants to Determine a Fuel Surcharge to Add