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Arizona Transportation Company operates a fleet of delivery trucks. The company has determined that if a truck is driven 171,000 miles during a year,
Arizona Transportation Company operates a fleet of delivery trucks. The company has determined that if a truck is driven 171,000 miles during a year, the average operating cost is $4 per mile. If a truck is driven only 114,000 miles during a year, the average operating cost increases to $5 per mile. Required: 1. Using the high-low method, estimate the variable operating cost per mile and the annual fixed operating cost associated with the fleet of trucks. Variable cost: per mile Fixed cost: per year 2. If a truck were driven 152,000 miles during a year, what total operating cost would you expect to be incurred?
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