# Estimating a cost function, high-low method. Reisen Travel offer

Estimating a cost function, high-low method. Reisen Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its 10 helicopters makes between 1,000 and 2,000 round-trips per year. The records indicate that a helicopter that has made 1,000 round-trips in re year incurs an average operating cost of $350 per round-trip, and one that has made 2,000 round-trips in -e year incurs an average operating cost of$300 per round-trip.
1. Using the high-low method, estimate the linear relationship y = a + bX, where y is the total annual operating cost of a helicopter and X is the number of round-trips it makes to JFK airport during the year
2. Give examples of costs that would be included in a and in b
3. If Reisen Travel expects each helicopter to make, on average, 1,200 round-trips in the coming year, what should its estimated operating budget for the helicopter fleet be?

Hi

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• ### Cost Functions. Exercise

February 28, 2012

. Cost Functions . Exercise 10 -22 on page 367. Answer the following questions HOw would you determine the most important cost driver when estimating cost functions in the case of Reisen Travel ? Identify the cost driver and how it would impact Reisens operating budget .
The text passage describes a scenario where Reisen Travel offers helicopter services and provides data on the relationship between the number of round-trips and the average operating cost per round-trip. It then asks for the estimation of a cost function and budgeting based on expected usage.
multiple_questions

1. the passage contains multiple mathematical questions, including the estimation of a linear relationship using the high-low method and the calculation of an estimated operating budget.
2. no answers to these questions are provided in the text.
Given a text passage, determine:
    1. If it contains a mathematical question (including word problems or calculations)
    2. If an answer to that mathematical question is provided in the text

First, describe the content structure you found in 1-2 sentences.

Then provide your analysis in the following format:
TYPE: <one of the following values>
- NO_QUESTION
- SINGLE_QUESTION
- SINGLE_QUESTION_WITH_ANSWER
- MULTIPLE_QUESTIONS
- MULTIPLE_QUESTIONS_WITH_ANSWERS
system
# Estimating a cost function, high-low method. Reisen Travel offer

Estimating a cost function, high-low method. Reisen Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its 10 helicopters makes between 1,000 and 2,000 round-trips per year. The records indicate that a helicopter that has made 1,000 round-trips in re year incurs an average operating cost of $350 per round-trip, and one that has made 2,000 round-trips in -e year incurs an average operating cost of$300 per round-trip.
1. Using the high-low method, estimate the linear relationship y = a + bX, where y is the total annual operating cost of a helicopter and X is the number of round-trips it makes to JFK airport during the year
2. Give examples of costs that would be included in a and in b
3. If Reisen Travel expects each helicopter to make, on average, 1,200 round-trips in the coming year, what should its estimated operating budget for the helicopter fleet be?

Hi

## Related Questions in Cost Concept

• ### Speedy Parcel Service operates a fleet of delivery trucks in

(Solved) October 15, 2013

during a year , the average operating cost increases to 13.6 cents per mile. Required: 1 . Using the high-low method , estimate the variable and fixed cost elements of the annual cost of truck operation. 2 . Express the variable and fixed costs in the form Y = a + bX . 3 . If a truck were driven...

Solution : Part - 1 Miles Average operating cost cents per mile Total 120000 11.6 $1,392,000 80000 13.6$1,088,000 Variable cost = Difference in total operating cost/ difference in miles...
• ### Hoi Chong Transport, Ltd; operates a fleet of delivery trucks

(Solved) October 15, 2013

cost increases to 13.4 cents per kilometer. (The Singapore dollar is the currency used in Singapore.) Required: 1 . Using the high-low method , estimate the variable and fixed cost elements of the annual cost of the truck operation. 2 . Express the variable and fixed costs in the form Y = a + bX . 3

1) Variable cost element = Difference in cost / Difference in run = (105000*11.4 - 70000*13.4) / (105000-70000) = 7.40 per km Fixed cost element = Total cost - Variable cost = 105000*11.4 -...
• ### its question 3 on worksheet 2 with the electronic ltd

(Solved) September 23, 2014

its question 3 on worksheet 2 with the electronic ltd

• ### Browns' Company sells ten different styles of relatively inexpensive football jerseys with identical...

(Solved) May 15, 2015

is the net total dollar advantage (disadvantage) of purchasing the part ratherthan making it? 3 . What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 20,000 units required each year ? They will still lease

The solution to : Browns' Company sells ten different styles of relatively inexpensive football jerseys with identical purchase costs and selling prices. Brown is trying to determine the...
• ### Cost Functions. Exercise

February 28, 2012

. Cost Functions . Exercise 10 -22 on page 367. Answer the following questions HOw would you determine the most important cost driver when estimating cost functions in the case of Reisen Travel ? Identify the cost driver and how it would impact Reisens operating budget .
user
The text passage describes a scenario where Reisen Travel offers helicopter services and provides data on the relationship between the number of round-trips and the average operating cost per round-trip. It then asks for the estimation of a cost function and budgeting based on expected usage.

TYPE: MULTIPLE_QUESTIONS

1. The passage contains multiple mathematical questions, including the estimation of a linear relationship using the high-low method and the calculation of an estimated operating budget.
2. No answers to these questions are provided in the text.