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Based on the data provided here, calculate the items requested: Annual depreciation $ 2,500 Annual mileage 14,160 Current year's loan interest $ 690 Miles per gallon 24 Insurance $ 800 License and registration fees $ 105 Average gasoline price $ 3
Based on the data provided here, calculate the items requested:
| Annual depreciation | $ | 2,500 | Annual mileage | 14,160 | ||
| Current year's loan interest | $ | 690 | Miles per gallon | 24 | ||
| Insurance | $ | 800 | License and registration fees | $ | 105 | |
| Average gasoline price | $ | 3.50 | per gallon | Oil changes / repairs | $ | 610 |
| Parking / tolls | $ | 580 | ||||
a. Calculate total annual operating cost of the motor vehicle.
b. Calculate operating cost per mile.
Expert Solution
1a. Calculate total annual operating cost of the motor vehicle.
- Calculation of Fixed Cost:
|
Annual depreciation |
$2,500 |
|
Current year's loan interest |
$690 |
|
Insurance |
$800 |
|
License and registration fees |
$105 |
|
Total Fixed Cost = |
$4,095 |
- Calculation of Variable Cost:
|
Total gasoline Cost |
$2,065 |
|
Parking / tolls |
$580 |
|
Oil changes / repairs |
$610 |
|
Total Fixed Cost = |
$3,255 |
Operating Cost = Fixed Cost +Variable Cost = $4,095 + $3,255 = $7,350
b. Calculate operating cost per mile.
- Calculate operating cost per mile = $7,350/14,160 = $0.52
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