Reference no: EM132537656

High-Low Method. The city of Rockville reported the following annual cost data for maintenance work performed on its fleet of trucks.

Reporting Period (Year)            Total Costs              Level of Activity (Miles Driven)

Year 1                                     $ 750,000                (225,000) miles

Year 2                                     $850,000                  (240,000) miles

Year 3                                       $1,100,000                (430,000) miles

Year 4                                        $1,150,000                 (454,000) miles

Year 5                                         $1,250,000                  (560,000) miles

Year 6                                          $1,550,000                   (710,000) Miles

Required:

Question 1: Use the four steps of the high-low method to estimate total fixed costs per year and the variable cost per mile. State your results in the cost equation form Y = f + vX.

Question 2: What would the estimated costs be if the trucks drove 500,000 miles in year 7?