Solution-Estimate total fixed costs per year

Estimate total fixed costs per year

Reference no: EM132545329

Question - High-Low Method. The city of Rockville reported the following annual cost data for maintenance work performed on its fleet of trucks.

Reporting Period (Year)	Total Costs	Level of Activity (Miles Driven)
Year 1	$750,000	225,000
Year 2	850,000	240,000
Year 3	1,100,000	430,000
Year 4	1,150,000	454,000
Year 5	1,250,000	560,000
Year 6	1,550,000	710,000

Required -

a. Use the four steps of the high-low method to estimate total fixed costs per year and the variable cost per mile. State your results in the cost equation form Y = f + vX.

b. What would the estimated costs be if the trucks drove 500,000 miles in year 7?

Reference no: EM132545329

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Estimate total fixed costs per year

Reference no: EM132545329

Reference no: EM132545329

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