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Russell Preston delivers parts for several local auto parts stores. He charges clients $1.30 per mile driven. Russell has determined that if he drives 3,500
Russell Preston delivers parts for several local auto parts stores. He charges clients $1.30 per mile driven. Russell has determined that if he drives 3,500 miles in a month, his average operating cost is $0.85 per mile. If he drives 4,500 miles in a month, his average operating cost is $0.75 per mile. Russell has used the high-low method to determine that his monthly cost equation is total cost = $1,260 + $0.40 per mile. Required: 1. Determine how many miles Russell needs to drive to break even. 2. Assume Russell drove 1,800 miles last month. Without making any additional calculations, determine whether he earned a profit or a loss last month. 3. Determine how many miles Russell must drive to earn $2,340 in profit. 4-a. Prepare a contribution margin income statement assuming Russell drove 1.800 miles last month. 4-b. Use the information provided in Req 4a to calculate Russell's degree of operating leverage. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req3 Req 4A Req 4B Prepare a contribution margin income statement assuming Russell drove 1,800 miles last month. RUSSELL PRESTON Contribution Margin Income Statement For Last Month Contribution Margin Income from Operations
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