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Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck travels 135,000 kilometers in a

Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck travels 135,000 kilometers in a year, the average operating cost is 14.5 cents per kilometer. If a truck travels only 90,000 kilometers in a year, the average operating cost rises to 18.1 cents per kilometer. 


Required:
1.

Using the high-low method, estimate the variable and fixed cost elements of the annual cost of operating the truck. 


2.

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

3.

If a truck traveled 112,000 kilometers in a year, what total cost would you expect to incur? 







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