Question

Hoi Chong Transport, Ltd. Operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 125,000 kilometres during a year, the average operating cost is 12.520 cents per kilometre. If a truck is driven only 90,000 kilometres during a year, the average operating cost increases to 16.5 cents per kilometre. (The Singapore dollar is the currency used in Singapore.)

Answer 1

Answer:

The total cost will be "$1,279,286.25".

Explanation:

The total cost at 125000 Km will be:

$=125000\times 12.520$

$=1,565,000$ ($)

The total cost at 90000 Km will be:

$=90000\times 16.5$

$=1,485,000$ ($)

The variable cost will be:

$=\frac{(1,565,000 - 1,485,000)}{(125000 -90000) }$

$=2.28571$ ($)

Now,

Fixed cost = $Total \ cost -variable \ c ost$

                  = $1,565,000 - 125000\times 2.28571$

                  = $1,279,286.25$ ($)