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Side Hustle Inc. operates a fleet of delivery trucks in Toronto. Analysis shows that if a truck is driven 115,000 kilometres during a year, the average operating cost is 12.4 cents ($0.124) per kilometre. If a truck is driven only 75,000 kilometres during a year, the average operating cost increases to 14.4 cents ($0.144) per kilometre.
Required:
Problem A) Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation
Problem B) If a truck was driven 87,000 kilometres during a year, what total cost would you expect to be incurred'!
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