Question

The total operating cost for the truck is $400 000 per year. The percentage breakdown of this total amount was: 40%: Fixed costs (insurance, registration, wages) 30%: Fuel 20%: Finance 10%: Maintenance (service, repairs, tyres) Suppose the fuel price increases from $1.50 to $1.60 per litre. How much does this add to the total operating cost per year?

Answer 1

To find this, you have to find the specific cost of each service.
40% fixed costs: 400000 x 0.4 = 160000$
30% fuel: 400000 x 0.3 = 120000$
20% finance: 400000 x 0.2 = 80000$
and 10% maintenance: 400000 x 0.1 = 40000$
So the price was originally $1.50 (for fuel). This means that 120000$ was spent on fuel. Doing the math, it's 120000/1.50 = 80000 liters of fuel. So at the new price, the cost of all 80k liters would be 80000 x 1.60 = 128000. That's a 8000 increase in price, so the total cost is now $408000.