Question

What is the annual cost per mile of operating a car given the following information? Item Value Annual miles driven 11,800 Gas cost: Average miles per gallon Average cost of gas per gallon 24 $ 2.79 Annual depreciation $2,500 Interest $ 650 Insurance $ 680 License $ 65 Repairs/oil $ 370 Parking $ 498 Hint: Calculate the cost of gas, add all other cost and divide by the miles driven.

Answer 1

Answer:

Annual cost per mile of operating a car=$0.409 per mile

Explanation:

Step 1: Calculate the total cost of gas and other associated cost

Total cost of gas=price per gallon×number of gallons consumed

where;

price per gallon=$ 2.79

number of gallons consumed=24

replacing;

Total cost of gas=(24×2.79)=$66.96

Additional  costs=Annual depreciation+interest+insurance+license+

repairs/oil+parking

where;

Annual depreciation=$2,500

interest=$650

insurance=$680

license=$65

repairs/oil=$370

parking=$498

replacing;

Additional costs=(2,500+650+680+65+370+498)=$4,763

Total costs=total gas cost+additional cost=(66.96+4,763)=4,829.96

Total annual operating cost=$4,829.96

Annual cost per mile=Total annual operating costs/number of miles driven

Annual cost per mile=4,829.96/11,800

Annual cost per mile=$0.409 per mile