Answer:
Total annual operating cost of the motor vehicle is $7,350 and total variable cost is $3,255
Explanation:
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
The total cost of operating the vehicle will be sum of fixed and variable costs.
Fixed Cost:
Depreciation: 2,500
Loan Interest: 690
Insurance: 800
License & Registration Fees: 105
Total Fixed Cost: 2,500 + 690 + 800+ 105 = $4,095
Variable Cost:
Parking Tolls: 580
Gasoline: 2,065 (Total miles/Miles Gallon=Total Gallons; 14,160/24=
590 Gallons, total gallons x cost/gallon = total gasoline cost; 590 x 3.50)
Oil Change Repairs= 610
Total Variable cost: 580+ 2,065 + 610 = $3,255
Total cost of operating motor vehicle:
Fixed + Variable: $4,095 + $3,255 = $7,350
Answer:
Explanation:
Annual depreciation = $2500
Annual mileage = 14160
current year loan interest = $690
miles per gallon = 24
insurance = $800
license and registration = $105
average gasoline price = $3.5 per gallon
oil changes/repairs = $610
parking / toll $580
The total annual operating cost = total fixed cost + total variable cost
total fixed cost = annual depreciation + loan interest + insurance + license
= $2500 + $690 + $800 + $105 = $4095
variable cost = parking + oil changes/repairs + gasoline price
gasoline price = (annual mileage / miles per gallon) * average gasoline price
= (14160/24) * $3.5 = $2065
back to variable cost = $580 + $610 + $2065 = $3255
therefore total annual operating cost = $4095 + $3255 = $7350
