Answer:
$1.75 and $18,000,000
Explanation:
The computation of the fixed cost and the variable cost per gross ton mile by using high low method is shown below:
Variable cost per gross ton mile = (High transportation cost - low transportation cost) ÷ (High Gross-Ton Miles - low Gross-Ton Miles)
= ($40,312,500 - $22,375,000) ÷ (12,750,000 miles - 2,500,000 miles)
= $17,937,500 ÷ 10,250 ,000 miles
= $1.75
Now the fixed cost equal to
= High operating cost - (High gross ton miles × Variable cost per gross ton mile)
= $40,312,500 - (12,750,000 miles × $23)
= $40,312,500 - $22,312,500
= $18,000,000
We simply applied the above formula
