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QUESTION

Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area.

Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful study by the company’s cost analyst has determined that if a truck is driven 108,000 miles during a year, the average operating cost is 11.9 cents per mile. If a truck is driven only 72,000 miles during a year, the average operating cost increases to 13.7 cents per mile.Required:1.Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (Round the "Variable cost per mile" to 3 decimal places and the "Fixed cost" to the nearest dollar amount.) Variable cost$ per mile Fixed cost$ per year--------------------------------------------------------------------------------2.Express the variable and fixed costs in the form Y = a + bX. (Round the "Variable cost per mile" to 3 decimal places and the "Fixed cost" to the nearest dollar amount.) Y =$ +$ X3.If a truck were driven 90,000 miles during a year, what total cost would you expect to be incurred? (Round the "Variable cost per mile" to 3 decimal places. Round your intermediate and final answers to the nearest dollar amount.) Total annual cost$
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