Great Plains 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 Great Plains 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 |
$1,050,000 |
285,000 |
|
February |
1,150,000 |
325,000 |
|
March |
1,350,000 |
400,000 |
|
April |
1,000,000 |
250,000 |
|
May |
1,225,000 |
375,000 |
|
June |
1,600,000 |
450,000 |
Determine the variable cost per gross ton mile and the fixed cost.