Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Speedy Pete's 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 Number of Deliveries May June July 1,800 2,010 2,175 Delivery Cost $63,450 67,120 66,990 68,020 73,400 72,850 75,450 73,300 August September October November December 2,200 2,550 2,630 2,800 2,725 Speedy Pete's 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. 3. Using the high-low method, construct the cost formula for total delivery cost. Total Delivery Cost = $_ +($ x Number of Deliveries) Feedback Check My Work Step 1: Find the high and low points. Step 2: Calculate the variable rate: High Cost - Low Cost Variable Rate = High Number of Deliveries - Low Number of Deliveries Step 3: Calculate the fixed cost. Fixed Cost = Total Cost - (Variable Rate x Number of Deliveries) (Hint : Check your work by computing fixed cost using the high point.) Step 4: Construct a cost formula