Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883



Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

High-low method for service company
Miss River 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 Miss River Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved.

Determine the variable cost per gross-ton mile and the fixed costs.

To determine

Concept Introduction:

Mixed Costs:

There are three types of costs according to the unit of production; Variable, Fixed and Mixed. Variable costs change proportionally with the number of units produced and variable cost per unit remains constant. Fixed Cost remains same in totality irrespective of the number of units produced.

The mixed cost is the mix of variable and fixed cost, some of its part is fixed and some variable.

High-Low Method:

This method is used to determine the fixed as well as variable part of the mixed cost. The formula for calculation of variable cost per unit is as follows:

   Variable cost per unit =  ( High Cost - Low Cost ) ( High units - low units )

The formula to calculate the Fixed Cost is as follows:

  Fixed Cost = Total cost - (Units×Variable cost per unit)

To Calculate:

The variable cost per unit and total fixed cost


The variable cost per unit and total fixed cost are calculated as follows:

    High Low MethodHigh LowDifference
    Number of units 4500000

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Name three major categories of deductions from an employees gross pay.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

(Oligopoly Power) What are three sources of oligopolies?

ECON: MICRO4 (New, Engaging Titles from 4LTR Press)

EXPECTED INTEREST RATE Lloyd Corporations 14% coupon rate, semiannual payment. 1,000 par value bonds, which mat...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

How are inflation and unemployment related in the short run?

Principles of Microeconomics (MindTap Course List)

What are the major forces in consumerism today?

Foundations of Business (MindTap Course List)