Question: Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Speedy Petes is a small start-up company that delivers high-end

Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Speedy Petes is a small start-up company that delivers high-end coffee drinks to large metropolitan office buildings via a cutting-edge motorized coffee cart to compete with other premium coffee shops. Data for the past 8 months were collected as follows:

Month Delivery Cost Number of Deliveries

May $63,450 1,800

June 67,120 2,010

July 66,990 2,175

August 68,020 2,200

September 73,400 2,550

October 72,850 2,630

November 75,450 2,800

December 73,300 2,725

Speedy Petes controller wants to calculate the fixed and variable costs associated with its cutting-edge delivery service. Required:

1. Using the high-low method, calculate the fixed cost of deliveries.

2. Using the high-low method, calculate the variable rate per delivery.

Total Delivery Cost=

3. Using the high-low method, construct the cost formula for total delivery cost.

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