Stegman,Ltd

question 105

Essay

Stegman,Ltd.,provides nationwide passenger train service on 21,000 miles of routes.Selected operating data for fiscal 2014 are shown below.

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?

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision.

Labor Supply Curve

A graphical representation showing the relationship between the quantity of labor that workers are willing to provide and the wage rate.

Pay Raise

An increase in the amount of money earned by an employee.

Wages Paid

The total compensation provided to employees in exchange for their labor, often based on hourly or monthly rates.