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.

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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