=+Hourly rate for employee picking up the inventory $25.40 Last year the vehicle was driven 12000 kilometres. The vehicle’s fuel consumption is 8 litres per 100 kilometres. Rachel is planning on opening another two pharmacies next year and estimates that this would increase the kilometres travelled to 20000. On the other hand, if the inventory management system can be improved she may be able to decrease the number of kilometres travelled to 4000. If the car-sharing cooperative is chosen, the kilometres travelled will be half of whatever they would be with owning a vehicle.

Required 1 Evaluate the two options by determining the fixed and variable costs.