Kristen Lu purchased a used automobile for $17,150 at the beginning of last year
ID: 2520009 • Letter: K
Question
Kristen Lu purchased a used automobile for $17,150 at the beginning of last year and incurred the following operating costs Depreciation ($17,150 5 years) Insurance Garage rent Automobile tax and license Variable operating cost $3,430 $1,800 900 $ 470 0.05 per mile The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-ine depreciation is $3,430. The car is kept in a garage for a monthly fee Required 1 Kristen drove the car 22,000 miles last year Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.) Average fixed cost per mile Varable operating cost per mile Average cost per mile 0.05 0.05Explanation / Answer
Answer)
Average fixed cost per mile:[total fixed cost/no. Of miles]
=[Depreciation+insurance+garage rent+automobile tax and license]/no. Of miles
=$[3430+1800+900+470]/22000 miles
=$0.3 per mile
Average cost for owning and operating the car per mile:
Average fixed cost per mile+average variable cost per mile
=$0.3+$0.05=0.35
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