Use the high-low method to estimate the variable cost per tour mile traveled and the fixed cost per month.

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

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