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9. Swift Trans, Inc., operates a parcel delivery service across the nation. The company keeps detailed records relating to operating costs of trucks, and has
9. Swift Trans, Inc., operates a parcel delivery service across the nation. The company keeps detailed records relating to operating costs of trucks, and has found that if a truck is driven 150,000 miles per year the average operating cost is 10 cents per mile. This cost increases to 11 cents per mile if a truck is driven only 100,000 miles per year. Assume that all of the activity levels mentioned in this problem are within the relevant range. Required: a. Using the high-low method, derive the cost formula for truck operating costs. b. Using the cost formula you derived above, what total cost would you expect the
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