Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted OutputSpeedy Pete’s is a small start-up company that delivers high-end coffee drinks to large metropolitan office buildings via a cutting-edge motorized coffee cart to compete with other premium coffee shops. Data for the past 8 months were collected as follows:MonthDelivery CostNumber of DeliveriesMay$63,450 1,800 June67,120 2,010 July66,990 2,175 August68,020 2,200 September73,400 2,550 October72,850 2,630 November75,450 2,800 December73,300 2,725 Assume that this information was used to construct the following formula for monthly delivery cost.Total Delivery Cost = $41,850 + ($12.00 × Number of Deliveries)Required:Assume that 3,000 deliveries are budgeted for the following month of January. Use the total delivery cost formula for the following calculations:1. Calculate total variable delivery cost for January.$2. Calculate total delivery cost for January.$

Variable cost per unit = (Highest activity cost - Lowest activity cost) / (Highest activity units -…

Answered: Using High-Low to Calculate Predicted…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 27BEB: Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output Refer...

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Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output

Speedy Pete’s is a small start-up company that delivers high-end coffee drinks to large metropolitan office buildings via a cutting-edge motorized coffee cart to compete with other premium coffee shops. Data for the past 8 months were collected as follows:

Month	Delivery Cost	Number of Deliveries
May	$63,450	1,800
June	67,120	2,010
July	66,990	2,175
August	68,020	2,200
September	73,400	2,550
October	72,850	2,630
November	75,450	2,800
December	73,300	2,725

Assume that this information was used to construct the following formula for monthly delivery cost.

Total Delivery Cost = $41,850 + ($12.00 × Number of Deliveries)

Required:

Assume that 3,000 deliveries are budgeted for the following month of January. Use the total delivery cost formula for the following calculations:

1. Calculate total variable delivery cost for January.
$

2. Calculate total delivery cost for January.
$

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