Western Transport, Ltd, operates a fleet of delivery trucks in Parramatta. The company has determined that if a truck is driven 120,000 kilometres during a year, the average operating cost is 13 cents per kilometre. If a truck is driven only 90,000 kilometres during a year, the average operating cost increases to 14 cents per kilometre.

Required:

1. Using the high-low method, estimate the variable operating cost per kilometre rounded to two decimal places, and the annual fixed operating cost in whole dollars, associated with the fleet of trucks. (3 marks)
2. Express the variable and fixed costs in the form Y = a + bX. (1 mark)
3. If a truck were driven 64,000 kilometres during a year, what total operating cost would you expect to be incurred? (1 mark)