High-Low Method for a Service CompanyBoston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved. Transportation CostsGross-Ton MilesJanuary$999,000 347,000 February1,113,900 388,000 March787,200 251,000 April1,067,900 375,000 May895,700 302,000 June1,148,300 408,000 Determine the variable cost per gross-ton mile and the total fixed cost.Variable cost (Round to two decimal places.)$fill in the blank 1 per gross-ton mileTotal fixed cost$fill in the blank 2

The high low method is used to distribute the mixed cost into a fixed and variable cost. It is based…

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Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8E

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High-Low Method for a Service Company

Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved.

	Transportation Costs	Gross-Ton Miles
January	$999,000		347,000
February	1,113,900		388,000
March	787,200		251,000
April	1,067,900		375,000
May	895,700		302,000
June	1,148,300		408,000