Transcribed Image Text: High-Low Method for a Service Company
Boston 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 Boston 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
$846,300
356,000
February
943,600
398,000
March
666,900
258,000
April
904,700
385,000
May
758,800
310,000
June
972,800
419,000
Determine the variable cost per gross-ton mile and the fixed cost.
Variable cost (Round to two decimal places.)
2$
per gross-ton mile
Total fixed cost Transcribed Image Text: a. If Canace Company, with a break-even point at $290,400 of sales, has actual sales of $440,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the
nearest whole number.
1. $
2.
%
b. If the margin of safety for Canace Company was 35%, fixed costs were $1,444,625, and variable costs were 65% of sales, what was the amount of actual sales (dollars)?
(Hint: Determine the break-even in sales dollars first.)
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