Check my Exercise 12-14 Identification of Relevant Costs [LO12-1] Kristen Lu pur

Question

Check my Exercise 12-14 Identification of Relevant Costs [LO12-1] Kristen Lu purchased a used automobile for $29,000 at the beginning of last year and incurred the following operating costs $5,800 3,000 s 1,600 $ 800 $ 0.11 per mile Depreciation ($29,000 5 years) Insurance Garage rent Automobile tax and license Variable operating cost The variable operating cost consists of gasoline, oil, tires, maintenance and repairs Kristen estimates that, at her current rate of usage. the car will have zero resale value in five years, so the annual straight-line depreciation is $5,800. The car is kept in a garage for a monthly fee Required: 1. Kristen drove the car 28,000 miles last year. Compute the average cost per mile of owning and operating the car (Round your answers to 2 decimal places Average fixed cost per mile Variable operating cost per mle Average cost per mile 0.00 Prev 1 of 3 Next

Explanation / Answer

1 Average fixed cost per mile 0.4 =(5800+3000+1600+800)/28000 Variable operating cost per mile 0.11 Average cost per mile 0.51 2 Variable operating costs is relevant

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