Expand Your Critical Thinking 11-7 (Part Level Submission)

Cost-volume-profit analysis can also be used in making personal financial decisions. For example, the purchase of a new car is one of your biggest personal expenditures. It is important that you carefully analyze your options.

Suppose that you are considering the purchase of a hybrid vehicle. Let's assume the following facts. The hybrid will initially cost an additional $4,500 above the cost of a traditional vehicle. The hybrid will get 40 miles per gallon of gas, and the traditional car will get 24 miles per gallon. Also, assume that the cost of gas is $2.40 per gallon.

Using the facts above, answer the following questions.

(a)

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What is the variable gasoline cost of going one mile in the hybrid car? What is the variable cost of going one mile in the traditional car?(Round answers to 2 decimal places, e.g. 0.25.)

Hybrid car Traditional carVariable gasoline cost$

$