Question

Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 105,000 kilometers during a year, the average operating cost is 11.4 cents per kilometer. If a truck is driven only 70,000 kilometers during a year, the average operating cost increases to 13.4 cents per kilometer Required 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places.) Kilometers Total Annual Driven Cost High level of activity Low level of activity Change Variable cost per kilometer Fixed cost per year per kilometer 2. Express the variable and fixed costs in the form Y- a + bX. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places.) 3. If a truck were driven 80,000 kilometers during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations.) otal annual cost

Answer 1