Answer:
The maximum annual variable cost he can have to reach his projection is $1,940
Step-by-step explanation:
Given;
Number of miles drive per year N = 10,000 miles
Total annual Fixed cost F = $3,460
cost per mile(rate) r = $0.54 or less
Total cost = fixed cost + variable cost
Total cost = cost per mile × number of miles
Total cost = r × N = $0.54 × 10,000 = $5,400
Let V represent the total variable cost per year;
F + V ≤ r × N
Substituting the values;
3,460 + V ≤ 5,400
V ≤ 5,400 - 3,460
V ≤ 1,940
The maximum annual variable cost he can have to reach his projection is $1,940
