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Problem
Joyce Murphy runs a courier service in downtown Seattle. She charges clients $0.58 per mile driven. Joyce has determined that if she drives 2,600 miles in a month, her total operating cost is $800. If she drives 3,700 miles in a month, her total operating cost is $998.
Required:
1. Using the high-low method, determine Joyce's variable and fixed operating cost components. (Round your cost per unit answer to 2 decimal places.)
2. Complete the contribution margin income statement for Joyce's service assuming she drove 1,800 miles last month. (Assume this falls within the relevant range of operations).
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