Dollywood Corporation accumulates the following data concerning a mixed cost using miles as the activity level. Milles Driven Total Cost Milles Driven Total Cos January 10 , 000 $ 16 , 500 March 9 , 000 $ 12 , 500 February 8 , 000 $ 14 , 500 April 7 , 000 $ 12 , 000 \begin{array}{lccccc} & ext { Milles Driven } & ext {Total Cost } & & ext {Milles Driven } & ext {Total Cos }\ ext { January } & 10,000 & \$ 16,500 & ext { March } & 9,000 & \$ 12,500 \ ext { February } & 8,000 & \$ 14,500 & ext { April } & 7,000 & \$ 12,000\end{array} January February Milles Driven 10 , 000 8 , 000 Total Cost $16 , 500 $14 , 500 March April Milles Driven 9 , 000 7 , 000 Total Cos $12 , 500 $12 , 000 InstructionsCompute the variable and fixed cost elements using the high-low method.

Question

Dollywood Corporation accumulates the following data concerning a mixed cost using miles as the activity level.  Milles Driven  Total Cost  Milles Driven  Total Cos   January  10 , 000 $ 16 , 500  March  9 , 000 $ 12 , 500  February  8 , 000 $ 14 , 500  April  7 , 000 $ 12 , 000 \begin{array}{lccccc} & 	ext { Milles Driven } & 	ext {Total Cost  } & & 	ext {Milles Driven  } & 	ext {Total Cos }\	ext { January }  &  10,000  &  \$ 16,500  &  	ext { March }  &  9,000  &  \$ 12,500 \	ext { February }  &  8,000  &  \$ 14,500  &  	ext { April }  &  7,000  &  \$ 12,000\end{array}  January   February  ​  Milles Driven  10 , 000 8 , 000 ​ Total Cost  $16 , 500 $14 , 500 ​  March   April  ​ Milles Driven  9 , 000 7 , 000 ​ Total Cos  $12 , 500 $12 , 000 ​   InstructionsCompute the variable and fixed cost elements using the high-low method.

Jacob Wickey · Accepted Answer

Final Answer :  $ 16 , 500 − $ 12 , 000 10 , 000 − 7 , 000 = $ 1.50 =  variable cost per mile  $ 1.50 ( 10 , 000 ) + F C = $ 16 , 500  Fixed cost  = $ $ 1 , 500 ‾  Or  $ 1.50 ( 7 , 000 ) + F C = $ 12 , 000  Fixed cost  = $ 1 , 500 \begin{array} { l } \frac { \$ 16,500 - \$ 12,000 } { 10,000 - 7,000 } = \$ 1.50 = 	ext { variable cost per mile } \\\$ 1.50 ( 10,000 ) + \mathrm { FC } = \$ 16,500 \	ext { Fixed cost } = \$ \underline { \$ 1,500 } \\	ext { Or } \\\$ 1.50 ( 7,000 ) + \mathrm { FC } = \$ 12,000 \	ext { Fixed cost } = \$ 1,500\end{array} 10 , 000 − 7 , 000 $16 , 500 − $12 , 000 ​ = $1.50 =  variable cost per mile  $1.50 ( 10 , 000 ) + FC = $16 , 500  Fixed cost  = $ $1 , 500 ​  Or  $1.50 ( 7 , 000 ) + FC = $12 , 000  Fixed cost  = $1 , 500 ​

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