Cost behavior and cost classifications Shannon O’Reilly is trying to decide whether to continue to take public transportation to work or to purchase a car. Before making her decision, she would like to compare the cost of using public transportation and the cost of driving a car.
Required
(a) What activity measure should Shannon use as she estimates the cost of driving?
(b) What should Shannon view as incremental (variable or out-of-pocket) costs of driving from home to work?
(c) What are some fixed costs of driving a car?
(d) Suppose that if Shannon purchased a car, she would use it to take a 2-week scenic vacation by car. What activity measures might Shannon use to estimate her vacation and lodging expenses?