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Kristen Lu Purchased A Used Automobile For

The document contains information about the costs of owning and operating an automobile, including a $20,250 purchase price, $4,050 annual depreciation, insurance of $2,100, garage rent of $1,100, tax and license of $550, and variable operating cost of $0.09 per mile. It also notes the automobile was owned for 5 years and traveled 26,000 miles. Fixed costs per mile are calculated as $0.30 and variable operating costs per mile are $0.09, giving an average cost per mile of $0.39.

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Kailash Kumar
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233 views1 page

Kristen Lu Purchased A Used Automobile For

The document contains information about the costs of owning and operating an automobile, including a $20,250 purchase price, $4,050 annual depreciation, insurance of $2,100, garage rent of $1,100, tax and license of $550, and variable operating cost of $0.09 per mile. It also notes the automobile was owned for 5 years and traveled 26,000 miles. Fixed costs per mile are calculated as $0.30 and variable operating costs per mile are $0.09, giving an average cost per mile of $0.39.

Uploaded by

Kailash Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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purchased 20250

depreciation 20250 5 $ 4,050.00


Insurance $ 2,100.00
garage rent $ 1,100.00
Autombile tax and license $ 550.00
Variable operating cost $ 0.09

time 5
SLM 4050

q1 26000
q2
q3

Solution

Ques 1

Fixed cost per mile $ 0.30


Variable operating cost per mile $ 0.09
Average cost per mile $ 0.39

Working
Fixed cost per mile calculation
Depreciation $ 4,050.00
Insurance $ 2,100.00
Garage rent $ 1,100.00
Automobile tax and license $ 550.00
total $ 7,800.00
Divided by miles 26,000
Cost per mile $ 0.30

Ques 2

Option A:variable operating costs

Because
a)Depreciaiton is sunk cost/historical cost
b)Insurance cost is irrelevant cost
c)Automobile tax and license cost is also irrelevant cost
d)garge rent is relevant if she drives her own car but this is not mentioned in options

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