Spirit Freightways is a leader in transporting agricultural products in the western provinces of Canada. Reese Brown, a financial analyst at Spirit Freightways, is studying the behav- ior of transportation costs for budgeting purposes. Transportation costs at Spirit are of two types: (a) operating costs (such as labor and fuel) and (b) maintenance costs (primarily overhaul of vehicles). Brown gathers monthly data on each type of cost, as well as the total freight miles traveled by Spirit vehicles in each month. The data collected are shown below (all in thousands): ITI Month Operating Costs $ 942 Maintenance Costs Freight Miles $ 974 January February March 1,710 1,008 776 2,655 1,218 686 2,705 April May 1,380 694 4,220 1,484 588 4,660 June 1,548 422 4,455 1,568 352 July August September 4,435 1,972 420 4,990 1,190 564 2,990 October 788 1,302 962 2,610 November 762 2,240 December 772 1,028 1,490

Spirit Freightways is a leader in transporting agricultural products in the western provinces of Canada. Reese Brown, a financial analyst at Spirit Freightways, is studying the behav- ior of transportation costs for budgeting purposes. Transportation costs at Spirit are of two types: (a) operating costs (such as labor and fuel) and (b) maintenance costs (primarily overhaul of vehicles). Brown gathers monthly data on each type of cost, as well as the total freight miles traveled by Spirit vehicles in each month. The data collected are shown below (all in thousands): ITI Month Operating Costs $ 942 Maintenance Costs Freight Miles $ 974 January February March 1,710 1,008 776 2,655 1,218 686 2,705 April May 1,380 694 4,220 1,484 588 4,660 June 1,548 422 4,455 1,568 352 July August September 4,435 1,972 420 4,990 1,190 564 2,990 October 788 1,302 962 2,610 November 762 2,240 December 772 1,028 1,490

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 18E

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