Move It Across Town is a delivery service that uses four small vans and six pickup trucks
Fantastic news! We've Found the answer you've been seeking!
Question:
Move It Across Town is a delivery service that uses four small vans and six pickup trucks to deliver small to medium sized packages around the Denver Metropolitan area. The company costs include a considerable amount for gas, oil, and regular maintenance of these vehicles, which is done at a variety of service stations and repair shops. To budget vehicle expense for the upcoming year, the company’s accountant has gathered data on these expenses and the number of deliveries for each month of the current year.
we have Total vehicle expense and total delivery
January | $63,650 | 645 |
February | $68,900 | 743 |
March | $59,439 | 605 |
April | $62,694 | 658 |
May | $57,593 | 555 |
June | $68,339 | 699 |
July | $57,866 | 529 |
August | $61,620 | 681 |
September | $52,329 | 516 |
October | $55,826 | 602 |
November | $59,192 | 604 |
December | $58,182 | 571 |
Required:
- Use the high-low estimation method to determine the variable cost per delivery and the total fixed cost per month (assume there are no outliers).
- How much total vehicle expense should be budgeted for in January of next year if estimated deliveries are 697?
Related Book For
Cost management a strategic approach
ISBN: 978-0073526942
5th edition
Authors: Edward J. Blocher, David E. Stout, Gary Cokins
Posted Date: