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High-Low Method for a Service Company Boston Railroad decided to use the high-low method and...

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Accounting

High-Low Method for a Service Company

Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed gross-ton miles, which is the total number of tons multiplied by the miles moved.

Transportation Costs Gross-Ton Miles
January $1,549,300 354,000
February 1,727,400 395,000
March 1,220,800 256,000
April 1,656,100 383,000
May 1,389,000 308,000
June 1,780,800 416,000

Determine the variable cost per gross-ton mile and the fixed cost.

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