Bruno Company accumulates the following data concerning a mixed cost, using miles as the activity level. Miles Driven Total Cost Miles Driven Total Cost January 7,995 $14,200 March 8,500 $15,011 February 7,495 13,503 April 8,200 14,490 Compute the variable cost per mile using the high-low method. (Round variable cost per mile to 2 decimal places e. g. 1.25.) Variable cost per mile $ Compute the fixed cost elements using the high-low method. Fixed costs $

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Business

Adyson Noble

27 September, 16:42

Bruno Company accumulates the following data concerning a mixed cost, using miles as the activity level. Miles Driven Total Cost Miles Driven Total Cost January 7,995 $14,200 March 8,500 $15,011 February 7,495 13,503 April 8,200 14,490 Compute the variable cost per mile using the high-low method. (Round variable cost per mile to 2 decimal places e. g. 1.25.) Variable cost per mile $ Compute the fixed cost elements using the high-low method. Fixed costs $

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Marquis Greene · Answer 1

The variable cost per mile is $1.50

The fixed cost element is $2,261

Explanation:

The computation of the fixed cost and the variable cost per hour by using high low method is shown below:

Variable cost per hour = (High Total cost - low total cost) : (High miles driven - low miles driven)

= ($15,011 - $13,503) : (8,500 - 7,495)

= $1,508 : 1,005 hours

= $1.50

Now the fixed cost equal to

= High operating cost - (High miles driven * Variable cost per hour)

= $15,011 - (8,500 * $1.50)

= $15,011 - $12,750

= $2,261