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Millard Airport: High Low method - variable cost, fixed cost

Problem 3 Show work in Excel

Millard Airport handles many private flights. The budget officer has compiled the following data regarding airport costs over the past year.

Month Airport costs Flights originating at the airport
January $22,000 1,200
February 19,000 1,000
March 18,000 900
April 19,000 1,150
May 16,500 800
June 20,000 1,100
July 21,000 1,500
August 17,000 800
September 21,000 1,200
October 19,000 1,000
November 24,000 1,400
December 18,000 1,100

1. Determine the variable cost per receiving order using the High-Low method.
2. Determine the fixed cost using the High-Low method.
3. Give the cost equation using the High-Low method to estimate the airport costs.
4. Estimate the airport costs using the High-Low method if the company expects 1,350 flights.

Solution Summary

The solution computes variable cost, fixed cost by High-low method for Millard Airport.

$2.19