Use the high-low method to estimate the variable cost per tour mile traveled and the fixed cost per month.
Variable Cost/tour mile = (12,500 – 11,000)/(20,000 – 8,000)
= 1,500 ÷ 12,000 = 0.125 per tour mile
Total Cost = $12,500
Total Variable Cost = 0.125 x 20,000 = (2,500)
Fixed Cost = 10,000 real