Author Question: Stegman, Ltd., provides nationwide passenger train service on 21,000 miles of routes. Selected ... (Read 57 times)

olgamartinez04 · **on:** Feb 5, 2023

Stegman, Ltd., provides nationwide passenger train service on 21,000 miles of routes. Selected operating data for fiscal 2021 are shown below.

Fuel Expense

Passengers

Passenger

Train Miles

Month

(000s)

Miles (000s)

(000s)

October 2020	$20,075	2,145	450,857	3,098
November 2020	22,037	2,154	451,448	3,091
December 2020	22,435	2,180	373,533	3,141
January 2021	23,613	2,151	377,438	3,178
February 2021	21,931	2,136	461,088	2,825
March 2021	26,204	2,174	458,762	3,175
April 2021	24,698	2,207	470,311	3,096
May 2021	24,832	2,296	492,429	3,197
June 2021	23,239	2,291	540,655	3,076
July 2021	24,481	2,414	578,133	3,191
August 2021	25,459	2,430	563,986	3,315
September 2021	25,021	2,148	448,263	3,066

Required:

a.	The above data provide three possible activity measures that could influence fuel

expense.
Use the high-low method to develop a cost formula for fuel expense for each of the
three measures.

b.	Do any of the cost formulas you developed in (a) appear to be a poor choice for

estimating
future train operations expense? Why?

c.	Which formula do you think will make the most accurate predictions? Why?

breounasmoot · **Reply #1 on:** Feb 5, 2023

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