Question - High-low method for Service Company
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 $597,600 239,000
February 666,300 267,000
March 470,900 173,000
April 638,800 259,000
May 535,800 208,000
June 686,900 281,000
Determine the variable cost per gross-ton mile and the fixed cost.
What is the Variable cost (to the nearest cent): per gross-ton mile?