Help, I can’t figure this out. I really need help on this.?
round-trips in the year incurs an average operating cost of $300 per round-trip, and one that has made 2,000 round-trips in the year incurs an average operating cost of $250 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?
Favorite Answer
So y = a + 200 x
If y = 300000, x = 1000 so 300000 = a + 200(1000)
300000 = a + 200000
100000 = a
Equation: y = 100000 + 200x
Included in a, which is unaffected by the number of flights, are fixed costs such as the utility cost to run the office, payment to lease the helicopter, advertising, etc. Included in b would be non-fixed costs like salaries, fuel, etc. If I understand your question!
Finally plug 1200 in for x to get the budget.
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