Kristen Lu purchased a used automobile for $10,100 at the beginning of last year and incurred the following operating costs: Depreciation ($10,100 ÷ 5 years) Insurance Garage rent Automobile tax and license Variable operating cost $ 2,020 $ 1,100 $ 500 $ 280 $ 0.11 per mile The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $2,020. The car is kept in a garage for a monthly fee. Required: 1. Kristen drove the car 13,000 miles last year. Compute the average cost per mile of owning and operating the car. Note: Round your answers to 2 decimal places. × Answer is complete but not entirely correct. Average fixed cost per mile $ 0.30 Variable operating cost per mile $ 0.41 Average cost per mile $ 0.71
Kristen Lu purchased a used automobile for $10,100 at the beginning of last year and incurred the following operating costs: Depreciation ($10,100 ÷ 5 years) Insurance Garage rent Automobile tax and license Variable operating cost $ 2,020 $ 1,100 $ 500 $ 280 $ 0.11 per mile The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $2,020. The car is kept in a garage for a monthly fee. Required: 1. Kristen drove the car 13,000 miles last year. Compute the average cost per mile of owning and operating the car. Note: Round your answers to 2 decimal places. × Answer is complete but not entirely correct. Average fixed cost per mile $ 0.30 Variable operating cost per mile $ 0.41 Average cost per mile $ 0.71
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Kristen Lu purchased a used automobile for $10,100 at the beginning of last year and incurred the following operating costs:
Depreciation ($10,100 ÷ 5 years)
Insurance
Garage rent
Automobile tax and license
Variable operating cost
$ 2,020
$ 1,100
$ 500
$ 280
$ 0.11 per mile
The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates, at her current rate of usage, the
car will have zero resale value in five years, so the annual straight-line depreciation is $2,020. The car is kept in a garage for a monthly
fee.
Required:
1. Kristen drove the car 13,000 miles last year. Compute the average cost per mile of owning and operating the car.
Note: Round your answers to 2 decimal places.
× Answer is complete but not entirely correct.
Average fixed cost per mile
$
0.30
Variable operating cost per mile
$
0.41
Average cost per mile
$
0.71
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