You have gathered the following vehicle costs:
| Vehicle Costs | ||||||
| Annual depreciation | $ | 2,500 | Annual mileage | 13,200 | ||
| Current year’s loan interest | $ | 650 | Miles per gallon | 24 | ||
| Insurance | $ | 680 | Average gasoline price | $ | 3.68 | per gallon |
| License and registration fees | $ | 65 | Oil changes/repairs | $ | 370 | |
| Parking/tolls | $ | 420 | ||||
| (a) | Calculate the annual variable and fixed costs of the vehicle. |
Fixed Costs
Annual Depreciation = $2,500
Interest on Loan = $650
Insurance = $680
License and registration fees = $65
Total Fixed cost = $3,895
Variable operating Costs
Parking /tolls = $420
Gasoline (13,200*3.68 / 24) = $2,024
Oil/repairs = $370
Total Variable operating Costs = $2,814
You have gathered the following vehicle costs: Vehicle Costs Annual depreciation $ 2,500 Annual mileage 13,200...