Blowing Rock 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 Blowing Rock 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 |
$1,384,400 |
|
307,000 |
|
| February |
1,543,600 |
|
343,000 |
|
| March |
1,090,900 |
|
222,000 |
|
| April |
1,479,900 |
|
332,000 |
|
| May |
1,241,200 |
|
267,000 |
|
| June |
1,591,300 |
|
361,000 |
|
Determine the variable cost per gross-ton mile and the fixed cost.
Variable cost:
|
$ per gross-ton mile |
| Total fixed cost: |
$ |