value: 2.50 points Problem 6-10 (LO6.2) Based on the data provided here, calcula
ID: 2810773 • Letter: V
Question
value: 2.50 points Problem 6-10 (LO6.2) Based on the data provided here, calculate the items requested: Annual depreciation Current year's loan interest Insurance Average gasoline price Parking/tolls $3,000 $ 730 $ 920 S 3.50 per gallon Oil changes/repairs $ 740 Annual mileage Miles per gallon License and registration fees 15,120 24 145 $ 850 a. Calculate total annual operating cost of the motor vehicle Total variable cost Total fixed cost Total annual operating cost b. Calculate operating cost per mile. (Enter your answer in cents rounded to 1 decimal place.) Operating cost per mile centsExplanation / Answer
a.
Variable cost
*Gasoline
$ 2,205
Oil changes and repair
$ 850
Parking / tolls
$ 740
Total variable cost
$ 3,795
Fixed cost
Annual depreciation
$ 3,000
Loan interest
$ 730
Insurance
$ 920
License and registration
$ 145
Total fixed cost
$ 1,795
Total annual operating cost
$ 5,590
*Annual Gasoline expenses = Annual mileage/miles per gallon x Gasoline per gallon
= 15,120/24 x $ 3.50
= 630 x $ 3.50 = $ 2,205
b.
Total operating cost per mile = Total annual operating cost/Annual mileage
= $ 5,590/15,120 = $ 0.36971 or $ 0.37
Total operating cost per mile is 37 cents
Variable cost
*Gasoline
$ 2,205
Oil changes and repair
$ 850
Parking / tolls
$ 740
Total variable cost
$ 3,795
Fixed cost
Annual depreciation
$ 3,000
Loan interest
$ 730
Insurance
$ 920
License and registration
$ 145
Total fixed cost
$ 1,795
Total annual operating cost
$ 5,590
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