Using High-Low to Calculate the Variable Rate, Calculate Fixed Cost, and Construct a Cost Function Refer to the information for Hungry Hannah’s above. Hungry Hannah’s controller wants to calculate the variable and fixed costs associated with its autonomous motorized delivery service.

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:

Required:
Using the high-low method, calculate the variable rate per delivery, calculate the total fixed labor cost, and construct the cost formula for total delivery cost.

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