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In: Accounting

A transport company is studying the total cost of operations. It is assumed that the costs...

A transport company is studying the total cost of operations. It is assumed that the costs are driven mainly by the kilometres covered. Data for the past four months is shown here:

Month Kilometres Total Cost ($)
January 8,000 144,000
February 5,000 120,000
March 7,000 141,000
April 9,000 195,000

a) What is the relevant range for the company operations?

b) Using the high-low method, estimate the company's variable cost per kilometre

Solutions

Expert Solution

Ans a) The relevant range is $120000 to 195000

ekkarill92 answered 4 weeks ago
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