Missoula Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Missoula Railroad is a measure of railroad operating activity, termed “gross-ton miles,” which is the total number of tons multiplied by the miles moved.

Determine the variable cost per gross-ton mile and the fixedcost.

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January February March April May June Transportation Costs $1,575,000 2,095,800 1,675,000 1,800,000 1426,600 2,050,000 Gross-Ton Miles 125,000 180,000 136,000 150,000 110,000 175,000