Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Kristen Lu purchased a used automobile for $20,650 at the beginning of last year and incurred the following operating costs Depreciation ($20,650 5 years) Insurance
Kristen Lu purchased a used automobile for $20,650 at the beginning of last year and incurred the following operating costs Depreciation ($20,650 5 years) Insurance Garage rent Automobile tax and license Variable operating cost $4,130 $2,200 $1,100 $570 $0.12 per mile The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $4,130. The car is kept in a garage for a monthly fee Required 1. Kristen drove the car 20,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.) Fixed cost per mile Variable operating cost per mile Average cost per mile 2. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross country trip for two weeks during spring break. What costs above are relevant in this decision? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.) Variable operating costs Depreciation 2 Automobile tax 2 License costs 2 Insurance costs
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started