Joyce runs a courier service in downtown Seattle. She charges clients $0.60 per
ID: 2543523 • Letter: J
Question
Joyce runs a courier service in downtown Seattle. She charges clients $0.60 per mile driven. Joyce has determined that is she drives 2,400 miles in a month her total operating cost is $700. If she drives 3,500 miles in a month her total operating cost is $810.1.using the high-low method, determine Joyce’s variable and fixed operating cost components. (Round your cost per unit answer to 2 decimal places)
2. Complete the contribution margin income statement for Joyce’s service assuming she drove 1550 miles last month. (Assume this falls within the relevant range of operations) Joyce runs a courier service in downtown Seattle. She charges clients $0.60 per mile driven. Joyce has determined that is she drives 2,400 miles in a month her total operating cost is $700. If she drives 3,500 miles in a month her total operating cost is $810.
1.using the high-low method, determine Joyce’s variable and fixed operating cost components. (Round your cost per unit answer to 2 decimal places)
2. Complete the contribution margin income statement for Joyce’s service assuming she drove 1550 miles last month. (Assume this falls within the relevant range of operations)
1.using the high-low method, determine Joyce’s variable and fixed operating cost components. (Round your cost per unit answer to 2 decimal places)
2. Complete the contribution margin income statement for Joyce’s service assuming she drove 1550 miles last month. (Assume this falls within the relevant range of operations)
Explanation / Answer
Req 1 Under 3500 miles total cost: $ 810 Under 2400 miles, Total cost: $ 700 Variable cost per mile: Change in cost / Change in miles (810-700 )/ (3500-2400) = $ 0.10 per mile Fixed cost: Total cost of 3500 miles: 810 Less; Vvariable cocst (3500 miles@$0.10) 350 Fixed cost: 460 Req 2: CONTRIBUTION MRGIN INCOME STATEMENT: Revenue (1550 miles @0.60) 930 Less: variable cost (1550 miles @$0.10) 155 Contribution marggin 775 Less: Fixed cost 460 Net income 315
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