Response to the following problem:
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.