The following information relates to Excalibur Delivery Services: Year 1: Total miles driven 615,000 Year 1: Total operating costs $211,500 Year 2: Total miles driven 935,000 Year 2: Total operating costs $275,500 Use the high-low method to calculate Excalibur’s total fixed costs

The following information relates to Excalibur Delivery Services: Year 1: Total miles driven 615,000 Year 1: Total operating costs $211,500 Year 2: Total miles driven 935,000 Year 2: Total operating costs $275,500 Use the high-low method to calculate Excalibur’s total fixed costs

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2DQ: Which of the following costs would be classified as variable and which would be classified as fixed,...

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

The following information relates to Excalibur Delivery Services:

Year 1: Total miles driven              615,000
Year 1: Total operating costs       $211,500
Year 2: Total miles driven              935,000
Year 2: Total operating costs       $275,500

Use the high-low method to calculate Excalibur’s total fixed costs.

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