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Determine the variable cost per gross-ton mile

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Problem - High-low method for service company - Diamond 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 Diamond 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

$1,190,000

385,000

February

1,043,000

434,000

March

900,000

350,000

April

1,015,000

420,000

May

920,000

360,000

June

1,250,000

525,000

Required - Determine the variable cost per gross-ton mile and the fixed cost.

Reference no: EM132685603

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