Question

Bethany Link delivers parts for several local auto parts stores. She charges clients $0.75 per mile driven. She has determined that if she drives 2,100 miles in a month, her average operating cost is $0.55 per mile. If Bethany drives 4,200 miles in a month, her average operating cost is $0.40 per mile.

Required:
1. Using the high-low method, determine Bethany’s variable and fixed operating cost components. Show this as a linear cost formula (y = a + bx).
2. Prepare a contribution margin income statement for the business last month, when Bethany drove 2,400 miles.



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  • CreatedFebruary 27, 2015
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