Question: Boston 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

Boston 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 Boston 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 total fixed cost.

January February March April May June Transportation Costs 1,776,000 2,700,000 1,650,000 1,860,000 1,440,000 1,566,000 Gross-Ton Miles 560,000 1,000,000 500,000 600,000 400,000 460,000

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