Determine the variable cost per gross-ton mile

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Problem - Continental 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 Continental 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

$24,500,000

3,000,000

February

22,375,000

2,500,000

March

29,000,000

6,300,000

April

34,800,000

9,500,000

May

40,312,500

12,750,000

June

35,500,000

10,000,000

Required - Determine the variable cost per gross-ton mile and the total fixed cost.

Reference no: EM132716482

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