Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 147,000 kilometers during a year, the average operating cost is 8.7 cents per kilometer. If a truck is driven only 98,000 kilometers during a year, the average operating cost increases to 9.6 cents per kilometer.

Required:

1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places and Fixed cost answer to nearest whole dollar amount.)

	Kilometers	Total Annual
	Driven	Cost
High level of activity
Low level of activity
Change	0	$0
Variable cost per kilometer		per kilometer
Fixed cost per year

2. 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.)

3. If a truck were driven 122,000 kilometers during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations.)