High-Low Method for a Service Company Boston Railroad decided to use the high-low method and...
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Accounting
High-Low Method for a Service Company
Boston 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 Boston 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 | $1,549,300 | 354,000 | ||
| February | 1,727,400 | 395,000 | ||
| March | 1,220,800 | 256,000 | ||
| April | 1,656,100 | 383,000 | ||
| May | 1,389,000 | 308,000 | ||
| June | 1,780,800 | 416,000 | ||
Determine the variable cost per gross-ton mile and the fixed cost.
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