Question

Oriole Company accumulates the following data concerning a mixed cost, using miles as the activity level. Miles Driven Total Cost Miles Driven Total Cost January 7,990 $14,170 March 8,510 $14,721 February 7,495 13,503 April 8,200 14,485 Compute the variable cost per mile using the high-low method. (Round answer to 2 decimal places, e.g. 2.25.)

Answer 1

Answer:

$1.2 per mile

Explanation:

Computation of the variable cost per mile using the high-low method

Using this formula

Variable cost per mile = (Highest activity cost - Lowest activity cost)/(Highest activity - Lowest activity)

Let plug in the

Variable cost per mile= (14,721 - 13,503)/(8,510 - 7,495)

Variable cost per mile= 1,218/1,015

Variable cost per mile=$1.2 per mile

Therefore the Variable cost per mile will be $1.2 per mile.