Intermediate: Cost behaviour

Average mileage from one gallon is 25 miles.

(a) From the above data you are required:
(i) to prepare a schedule to be presented to management showing for the mileages of 5000, 10000, 15000 and 30000 miles per annum:
( 1) total variable cost (2) total fixed cost (3) total cost (4) variable cost per mile (in pence to nearest penny)
(5) fixed cost per mile (in pence to nearest penny)
(6) total cost per mile (in pence to nearest penny)
If, in classifying the costs, you consider that some can be treated as either variable or fixed, state the assumption(s) on which your answer is based together with brief supporting reason(s).
(ii) on the graph paper provided to plot the information given in your answer to (i)

above for the costs listed against (1), (2), (3) and (6).
(iii) to read off from your graph(s) in (ii) and state the approximate total costs applicable to 18000 miles and 25000 miles and the total cost per mile (in pence)
at these two mileages.

(b) 'The more miles you travel, the cheaper it becomes.· Comment briefly on this statement

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Data: Cost of motor car Trade-in price after 2 years or 60 000 miles is expected to be Maintenance-6-monthly service costing 1000 miles Spares/replacement parts, per Vehicle licence, per annum Insurance, per annum Tyre replacements after 25 000 miles, four at Petrol, per gallon () 5500 1500 60 60 22860 150 37.50 each 1.90