Answer:
Total cost= 55 + 0.42*x
x= miles driven
Step-by-step explanation:
Giving the following information:
Bob's cost for his truck was $112.96 for 138 miles.
Carl's cost for his truck was $142.78 for 209 miles.
<u>To calculate the fixed cost and variable cost per mile, we need to use the high-low method:</u>
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (142.78 - 112.96) / (209 - 138)
Variable cost per unit= $0.42 per mile
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 142.78 - (0.42*209)
Fixed costs= $55
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 112.96 - (0.42*138)
Fixed costs= $55
<u>Finally, the cost equation:</u>
Total cost= 55 + 0.42*x
x= miles driven
