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Kate Jungemann, owner of Flower Hour, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Jungemann wants to set the delivery fee based on the distance driven to deliver the flowers. Jungemann wants to separate the fixed and variable portions of her van operating costs so that she has a better idea how delivery distance affects these costs. She has the following data from the past seven months: (Click the icon to view the data.) Use the high-low method to determine Flower Hour's cost equation for van operating costs. Use your results to predict van operating costs at a volume of 15,500 miles. Let's begin by determining the formula that is used to calculate the variable cost (slope). Change in cost Change in volume Variable cost (slope) Now determine the formula that is used to calculate the fixed cost component. Total operating cost Total variable cost Fixed cost Use the high-low method to determine Flower Hour's operating cost equation. (Round the variable cost to the nearest cent and the fixed cost to the nearest whole dollar.) y = X + Use the operating cost equation you determined above to predict van operating costs at a volume of 15,500 miles. The operating costs at a volume of 15,500 miles is Month Miles Driven Van Operating Costs 15,900 $5,430 17,300 $5,740 January February .... March ..... April 14,600 $4,940 16,300 $5,270 May 17,200 $5,820 June 15,200 $5,400 July .. 14,300 $4,990

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