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 knows if a truck is driven $144,000$ kilometers during a year, the average operating cost is $12\mathrm{.}2$ cents per kilometer. If a truck is driven only $96,000$ kilometers during a year, the average operating cost increases to $14\mathrm{.}8$ cents per kilometer.

Required:

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 $120,000$ 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 flxed operating cost associated with the fleet of trucks.

Note: Do not round your intermediate calculations. Round the Variable cost per kilometer to $3$ decimal places.