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We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is driven 159,000 kilometres during a year, the average
We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is driven 159,000 kilometres during a year, the average operating cost is 12.0 cents ($0.120) per kilometre. If a truck is driven only 85,000 kilometres during a year, the average operating cost increases to 13.9 cents ($0.139) per kilometre. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (Do not round your intermediate calculations. Round the "Variable cost per kilometer" to 3 decimal places.) High level of activity Low level of activity Change Kilometers Total Annual Driven Cost 159,000 $ 19,080 87,000 12,093 72,000 $ 6,987 Variable cost per kilometer $ 0.097 Fixed cost per year the form Y = a +bX. (Do not round your intermediate calculations. Roun "Variable cost 2. Express the variable and fixed costs per kilometer" to 3 decimal places.) Y = 3. If a truck were driven 139,400 kilometres during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations. Round the "Variable cost per kilometer" to 3 decimal places.) Total annual cost
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