Exercise $5$A$-3($Algo$)$ Cost Behavior; High$-$Low Method $[$L$05-10]$

Hoi Chong Transport, Limited, operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven $117,000$ kilometers during a year, the average operating cost is $12\mathrm{.}8$ cents per kilometer. If a truck is driven only $78,000$ kilometers during a year, the average operating cost increases to $14\mathrm{.}9$ cents per kilometer.

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Hint

Using the high$-$low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet of trucks.

Express the variable and fixed costs in the form $Y=a+bx.$

If a truck were driven $97,500$ kilometers during a year, what total operating cost would you expect to be incurred?

Complete this question by entering your answers in the tabs below.

Required $1$

Using the high$-$low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet of trucks. $($Do not round your intermediate calculations. Round the Variable cost per kilometer to $3$ decimal places.$)$

Variable cost

per kilometer

Fixed cost

per year