Question: Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period that Differs from the Data Period Refer to the information

Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period that Differs from the Data Period Refer to the information for Hungry Hannah’s above. Assume that this information was used to construct the following formula for monthly delivery cost.

Total Delivery Cost = $32,714 + ($3.84 × Number of Deliveries)

Hungry Hannah’s is a small start-up company that delivers food and beverages to customers in business and residential locations via a fleet of autonomous motorized devices, including self-driving cars and drones. Data for the past 8 months were collected as follows:

Month Delivery Cost Number of Deliveries May June $53,450 5,400 57,120 6,090

Required:
Assume that 9,000 deliveries are budgeted for the coming year. Use the total delivery cost formula to make the following calculations:
1. Calculate total variable delivery cost for the coming year.
2. Calculate total fixed delivery cost for the year.
3. Calculate total delivery cost for the year.

Month Delivery Cost Number of Deliveries May June $53,450 5,400 57,120 6,090 July 56,990 6,875 August 58,020 5,800 September 63,400 7,340 October 62,850 8,100 November 65,450 8,525 December 63,300 7,990

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