Need a Hair Cut Ltd. operates a fleet of rental cars in Kingsvilli. The company has determined that if a car is driven 105,000 kilometres during a year, the average operating cost is 12.665 cents per kilometre. If a car is driven only 70,000 kilometres during a year, the average operating cost increases to 14.5 cents per kilometre. Note: Please do not round the decimal places of cost per kilometre, which is 12.665 and 14.5 cents per km.

Required:

1. Using the highlow method, estimate the variable and fixed cost elements of the annual cost of truck operation. (15 marks)
2. Express the variable and fixed costs in the form Y = a + bX. (5 marks)
3. If a rental car were driven 80,000 kilometres during a year, what total cost would you expect to be incurred? (5 marks)