Question

Based on the data provided here, calculate the items requested: 13,800 Annual depreciation Current year's loan interest Insurance Average gasoline price Parking/tolis $ 2,500 $ 678 $ 755 $ 4.00 per gallon $ 520 Annual mileage Miles per gallon License and registration fees Oil changes/repairs $ $ 90 528 a. Calculate total annual operating cost of the motor vehicle. Total variable cost s Total fixed cost s Total annual operating cost 1,619 4,015 5,634 $ b. Calculate operating cost per mile. (Round your answer to 2 decimal places.) Operating cost per mile $ 40.91

Answer 1

Ans :

Annual mileage = 13,800

miles per gallon = 24

Total number of gallon in a year = 13,800 / 24 = 575 gallons

Gasoline price = 4 per gallon

Total gasoline price per year = 575 gallons * $ 4 per gallon

= $ 2,300

Total variable cost = total gasoline price per year + parking / tolls + oil changes/ repairs

= $ 2,300 + $ 520 + $ 520

= $ 3,340.

Total fixed cost = Annual depreciation + current year interest on loan + insurance + license and registration fees

= $ 2,500 + $670 + $ 755 + $ 90

= $ 4015

Total operating cost = Total variable cost + Total fixed cost

= $ 3,340 + $ 4,015

= $ 7,355.

(b) Operating cost per mile

Total annual operating cost = $ 7,355.

Total miles in a year = 13,800

Operating cost per mile = Total annual operating cost / Total miles in a year

= $ 7,355 / 13,800

= $ 0.53 per mile