Question

E6-26A (similar to) Kim Chen, owner of lower Mode, operatus a local chain of oral shops. Each shop has its own delivery van instand of charging Aflat delivery fan, Chion wants to set the delivery few based on the distance diven to deliver the flowers. Chen wants to sepa the fixed and variable portions or her van operating costs so that she has hetter idea how delivery distance affects these costs. She has the following data from the past seven months Click the icon to view the data Use the high-low method to determine Flower Mode's cost equation for van operating costs. Lise your results to predict van operating costs at 5 1 1 et's begin by determining the founula that is used to calculate the variable costsope). Change in cost Chargun volume = a ble cost (stop) Now determine the formula that is used to calculate the fixed cost component 1 Total operating cost - Total variable cost = Fixed cost Van Operating Costs 2 $5,90 $5280 Use the high low matnod to determine hower Mode's operating cost equation (Round the variable - L xis 3 3 SD 1,000 55,340 55450 55.230 54.680 1 PDo Homework - Madeline Sinn. Google Chrome Help - Google

Use the​ high-low method to determine Flower ModeFlower Mode​'s operating cost equation.

Use your results to predict van operating costs at a volume of 16,500 miles.

Answer 1

Variable cost = (Cost at highest activity - Cost at lowest activity) /(Highest activity-Lowest activity)

= (5280 - 4680)/(17400-14400)

= 0.2

Fixed cost = 5280 - (17400*0.2) = 1,800

So,the equation will be y = 1,800 + 0.20X

Estimated cost for 16,500 miles

= 1,800 + (16,500*0.20)

= 5,100