Question

Questions 6 and 7 are based on the following information: You are given information about the operating costs for Yogney Industries, which is a mixed cost: Month Distance (KM) 10,800 12,300 January February March April Operating costs $ 8,460 8,680 7,940 $ 8,310 8,830 May June 9,600 11,000 12,100 10,400 9,000 8,600 July August $ $ 8,420 7,880 7,680 Question 6) Based on the above information and using the high-low method, what is the variable cost component of Yogney's Operating Costs? A) $0.32 per kilometre B) $3.08 per kilometre C) $0.27 per kilometre D) $3.70 per kilometre E) $1.43 per kilometre

Answer 1

Operating Costs
	Distance(KM)	Operating Costs
High level of activity	12,300	$8,680
Low level of activity	8,600	$7,680
Change	3,700	$1,000
Variable cost per move =$1,000 / 3700 KM =$0.27 per kilometer