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

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

Step-by-step explanation:

The total cost at 125000 Km will be:

`=125000* 12.520`

`=1,565,000` ($)

The total cost at 90000 Km will be:

`=90000* 16.5`

`=1,485,000` ($)

The variable cost will be:

`=((1,565,000 - 1,485,000))/((125000 -90000) )`

`=2.28571` ($)

Now,

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

=
`1,565,000 - 125000* 2.28571`

=
`1,279,286.25` ($)