Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Bud
ID: 2331111 • Letter: U
Question
Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output
Speedy Pete’s is a small start-up company that delivers high-end coffee drinks to large metropolitan office buildings via a cutting-edge motorized coffee cart to compete with other premium coffee shops. Data for the past 8 months were collected as follows:
Month, Delivery cost, number of deliverys
May, $63,450, 1,800
June, 67,120, 2,010
July, 66,990, 2,175
August, 68,020, 2,200
September, 73,400, 2,550
October, 72,850, 2,630
November, 75,450, 2,800
December, 73,300, 2,725
Assume that this information was used to construct the following formula for monthly delivery cost.
Assume that 3,000 deliveries are budgeted for the following month of January. Use the total delivery cost formula for the following calculations:
1. Calculate total variable delivery cost for January.
$
2. Calculate total delivery cost for January.
$
Explanation / Answer
Total variable cost = (12 $ * no of deliveries)
= ( 12 * 3000 ) = 36000$
Fixed cost = 41850 $
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