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We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is driven 96,000 kilometres during a year, the average
We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is driven 96,000 kilometres during a year, the average operating cost is 10.3 cents ($0.103) per kilometre. If a truck is driven only 64,000 kilometres during a year, the average operating cost increases to 11.5 cents ($0.115) 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 kilometre to 3 decimal places and Fixed cost answer to nearest whole dollar amount.) Kilometers Driven 96,000 Total Annual Cost High level of activity Low level of activity Change 96,000 per kilometer Variable cost per kilometer Fixed cost per year 2. Express the variable and fixed costs in the form Y= a + bx. (Do not round your intermediate calculations. Round the Variable cost per kilometre to 3 decimal places.) Y = 3. If a truck was driven 80,000 kilometres during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations.) Total annual cost
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