Estimate the variable cost per tour mile travelled

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Reference no: EM132804581

Question - Rio Bus Tours has incurred the following bus maintenance costs during the recent tourist season. (The real is Brazil's national monetary unit. On the day this exercise was written, the real was equivalent in value to 0.2545 U.S. dollar.)

Month

Miles Travelled by Tour

Buses Cost

November

8,500

11,400 real

December

10,600

11,600

January

12,700

11,700

February

15,000

12,000

March

20,000

12,500

April

8,000

11,000

Required -

1. Use the high-low method to estimate the variable cost per tour mile travelled and the fixed cost per month.

2. Develop a formula to express the cost behavior exhibited by the company's maintenance cost.

3. Predict the level of maintenance cost that would be incurred during a month when 22,000 tour miles are driven.

Reference no: EM132804581

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