Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 93,000 kilometers during a year, the average operating cost is 9.2 cents per kilometer. If a truck is driven only 62,000 kilometers during a year, the average operating cost increases to 9.9 cents per kilometer.

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.

• Required 1
• Required 2
• Required 3

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

2. Express the variable and fixed costs in the form Y = a + bX.

Express the variable and fixed costs in the form Y = a + bX. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places.)

Y=___+___X

3. If a truck were driven 77,500 kilometers during a year, what total operating cost would you expect to be incurred?

(Do not round intermediate calculations.)

Total annual cost