Speedy parcel service operates a fleet of delivery trucks

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Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful study by the company's cost analyst has determined that if a truck is driven 126,000 miles during a year, the average operating cost is 13.3 cents per mile. If a truck is driven only 84,000 miles during a year, the average operating cost increases to 15.5 cents per mile.

Required:
1.

Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (Round the "Variable cost per mile" to 3 decimal places and the "Fixed cost" to the nearest dollar amount. Omit the "$" sign in your response.)




  Variable cost $ per mile
  Fixed cost $ per year

2.

Express the variable and fixed costs in the form Y = a + bX. (Round the "Variable cost per mile" to 3 decimal places and the "Fixed cost" to the nearest dollar amount. Omit the "$" sign in your response.)

  Y = $ + $ X
3.

If a truck were driven 105,000 miles during a year, what total cost would you expect to be incurred? (Round the "Variable cost per mile" to 3 decimal places. Round your intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

  Total annual cost $

Reference no: EM13575910

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