Question

answer this question fully

Joyce Murphy runs a courier service in downtown Seattle. She charges clients $0.50 per mile driven. Joyce has determined that if she drives 3,300 miles in a month, her total operating cost is $875. If she drives 4,400 miles in a month, her total operating cost is $1,095.

Required:
1. Using the high-low method, determine Joyce’s variable and fixed operating cost components.

2. Complete the contribution margin income statement for Joyce’s service assuming she drove 3,700 miles last month. (Assume this falls within the relevant range of operations).

Using the high-low method, determine Joyce’s variable and fixed operating cost components. (Round your cost per unit answer to 2 decimal places.)

Variable Cost per Mile Driven
Fixed Cost

Complete the contribution margin income statement for Joyce’s service assuming she drove 3,700 miles last month. (Assume this falls within the relevant range of operations).

JOYCE MURPHY
Contribution Margin Income Statement
For the Last Month
Contribution Margin
Net Operating Income

in those empty columns you pick one of these (

• Cost of Goods Sold
• Fixed Costs
• Gross Margin
• Interest Expense
• Net Income After Taxes
• Net Operating Income
• Sales Revenue
• Variable Costs

Answer 1

Using the high-low method, determine Joyce’s variable and fixed operating cost components. (Round your cost per unit answer to 2 decimal places.)

	Variable Cost per Mile Driven (1095-875)/(4400-3300) 0.20 per mile Fixed Cost (1095-4400*.20) 215

Complete the contribution margin income statement for Joyce’s service assuming she drove 3,700 miles last month. (Assume this falls within the relevant range of operations).

	JOYCE MURPHY Contribution Margin Income Statement For the Last Month Sales (3700*.50) 1850 Variable cost (3700*.20) 740 Contribution Margin 1110 Fixed cost 215   Net operating income 895