Bruno Company accumulates the following data converning a mixed cost, using miles as the activity level.

... Miles Driven ... Total Cost

January ... 8,000 ... $14,150

February ... 7,500 ... $13,500

March ... 8,500 ... $15,000

April ... 8,200 ... $14,490

Compute the variable - and fixed-cost elemts using the high-low method.

The answer is stated below:

Explanation:

Taking the highest and second lowest cost and miles driven as:

Cost = Highest - Lowest

Cost = $15,000 - $14,150

Cost = $850

Miles Driven = Highest - Lowest

Miles driven = 8,500 - 8,000

Miles Driven = 500

So,

= Cost / Miles driven

= $850 / 500

= $1.70

Total Cost would be 15,000 and 13,500

So, computing the variable cost as:

Variable cost of highest cost (VC) = Miles driven of $15,000 cost * $1.70

VC = 8,500 * $1.70

VC = $14,450

Variable cost of lowest cost (VC) = Miles driven of $13,500 cost * $1.70

VC = 7,500 * $1.70

VC = $12,750

Computing fixed cost as:

Fixed cost of highest cost = Total cost - VC

= $15,000 - $14,450

= $550

Fixed cost of lowest cost = Total cost - VC

= $13,500 - $12,750

= $750