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Question - 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 $833,900 303,000
February 929,700 338,000
March 657,100 219,000
April 891,400 328,000
May 747,600 263,000
June 958,500 356,000
Required - Determine the variable cost per gross-ton mile and the fixed cost.
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