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:

Hungry Hannah’s controller wants to calculate the variable and fixed costs associated with its autonomous motorized delivery service.

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