Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 144,000 kilometers during a year, the average operating cost is 12.2 cents per kilometer. If a truck is driven only 96,000 kilometers during a year, the average operating cost increases to 14.8 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.)

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 120,000 kilometers during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations.)