The delivery trucks of Italiana's Pizzeria incurred maintenance costs of $2,400 during its busiest month of 20xx, in which 8,000 miles were driven collectively. During its slowest month, $1,800 in maintenance costs were incurred, resulting from 5,000 miles being driven. Using the high-low method, what maintenance cost would the company expect to incur at 5,350 miles of driving?

Question

Quizplus · Accepted Answer

The variable cost per mile is ($2,400 - $1,800) / (8,000 - 5,000) = $0.20. The fixed cost is $1,800 - ($0.20 * 5,000) = $800. At 5,350 miles, the cost is $800 + ($0.20 * 5,350) = $1,870.

The Delivery Trucks of Italiana's Pizzeria Incurred Maintenance Costs of $2,400