24.

value: 5.78 points

Exercise 10-11 Identification of Relevant Costs [LO1]

Samantha Ringer purchased a used automobile for $25,950 at the beginning of last year and incurred the following operating costs:

Depreciation ($25,950 5 years)	$5,190
Insurance	$2,700
Garage rent	$1,400
Automobile tax and license	$710
Variable operating cost	5 per mile

The variable operating costs consist of gasoline, oil, tires, maintenance, and repairs. Samantha estimates that at her current rate of usage the car will have zero resale value in five years, so the annual straight-line depreciation is $5,190. The car is kept in a garage for a monthly fee.

Required:

1.	Samantha drove the car 25,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your intermediate and final answer to 2 decimal places.)

Average cost per mile

$

2.

Samantha is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks during spring break. What costs above are relevant in this decision? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

	Variable operating costs
	Depreciation
	Automobile tax
	License costs
	Insurance cost