Russell Preston delivers parts for several local auto parts stores. He charges clients $$0\mathrm{.}75$ per mile driven. Russell has determined that if he drives $3,150$ miles in a month, his average operating cost is $$0\mathrm{.}55$ per mile. If he drives $4,200$ miles in a month, his average

$10$ operating cost is $$0\mathrm{.}50$ per mile. Russell has used the high$-$low method to determine that his monthly cost equation is total cost $=$ points $$630+$$$0\mathrm{.}35$ per mile.

Required:

Determine how many miles Russell needs to drive to break even.

Assume Russell drove $1,875$ miles last month. Without making any additional calculations, determine whether he earned a profit or a loss last month.

Determine how many miles Russell must drive to earn $$1,000$ in profit.

a$.$ Prepare a contribution margin income statement assuming Russell drove $1,875$ miles last month.

b$.$ Use the information provided in Req $4$a to calculate Russell's degree of operating leverage.

Complete this question by entering your answers in the tabs below.

References

Req $1$

Determine how many miles Russell needs to drive to break even.

Note: Do not round your intermediate calculations.

Break$-$Even Miles

Miles