High$-$Low Method, High$$Low Method, Cost Formulas$$

During the past year, the high and low use of three different resources for Wilson Trucking occurred in July and April.$$

The resources are truck depreciation, fuel, and truck maintenance.$$

The number of kilometres travelled is the driver. The total costs of the three resources and the related number of truck kilometres are as follows:

Resource Truck Kilometres Total Cost $($$$)$

Truck depreciation:

High $46,000,0002,800,000$

Low $32,400,0002,800,000$

Fuel:

High $46,000,0001,610,000$

Low $32,400,0001,134,000$

Truck maintenance:

High $46,000,0001,797,200$

Low $32,400,0001,413,680$

Required:

Use the high$-$low method to answer the following questions.

$1-$ What is the variable rate for truck depreciation? The fixed cost? $5$ Marks

$2-$ What is the cost formula for truck depreciation? $5$ Marks

$3-$ What is the variable rate for fuel? The fixed cost? $5$ Marks

$4-$ What is the cost formula for fuel? $5$ Marks

$5-$ What is the variable rate for truck maintenance? The fixed cost? $5$ Marks

$6-$ What is the cost formula for truck maintenance? $5$ Marks

$7-$ Using the three costs formulas that you developed, predict the cost of each resource in a month with $36,000,000$ kilometres travelled $5$ Marks

$8-$ Describe the difference between a fixed cost and a variable cost. $5$ Marks