You just bought a motorcycle for $14,000. You plan to ride the motorcycle for two years, and then sell it for $8,400. During this two-year period, you expect to ride the motorcycle 28,000 miles each year, and you expect the motorcycle to get 50 miles per gallon of gasoline. The annual cost of insurance is $1,960, registration costs are $280 (good for two years), and the price of gasoline is $2.20 per gallon. During this same two-year period, you will need to service your motorcycle 8 times, at $250 per service check, and obtain 8 oil changes. Each oil change costs $30. You will also need to replace your tires 2 time(s) during this two-year period, and each time you replace your tires, it costs $300. a. Calculate the total fixed cost, total variable cost, and cost per mile for the two-year period, and then complete the table below. Instructions: Round your answers for total fixed cost and total variable cost to the nearest whole number. Round your answer for cost per mile to two decimal places. Total Fixed Cost $ 9800 Total Variable Cost $ 240 Cost per Mile $ b. Suppose you want to lower the cost per mile. You should focus on: O fixed costs, because they must be paid. fixed costs, because they represent a majority of the total costs. O variable costs, because they can be avoided. O variable costs, because they represent a majority of the total costs.
You just bought a motorcycle for $14,000. You plan to ride the motorcycle for two years, and then sell it for $8,400. During this two-year period, you expect to ride the motorcycle 28,000 miles each year, and you expect the motorcycle to get 50 miles per gallon of gasoline. The annual cost of insurance is $1,960, registration costs are $280 (good for two years), and the price of gasoline is $2.20 per gallon. During this same two-year period, you will need to service your motorcycle 8 times, at $250 per service check, and obtain 8 oil changes. Each oil change costs $30. You will also need to replace your tires 2 time(s) during this two-year period, and each time you replace your tires, it costs $300. a. Calculate the total fixed cost, total variable cost, and cost per mile for the two-year period, and then complete the table below. Instructions: Round your answers for total fixed cost and total variable cost to the nearest whole number. Round your answer for cost per mile to two decimal places. Total Fixed Cost $ 9800 Total Variable Cost $ 240 Cost per Mile $ b. Suppose you want to lower the cost per mile. You should focus on: O fixed costs, because they must be paid. fixed costs, because they represent a majority of the total costs. O variable costs, because they can be avoided. O variable costs, because they represent a majority of the total costs.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:You just bought a motorcycle for $14,000. You plan to ride the motorcycle for two years, and then sell it for $8,400. During
this two-year period, you expect to ride the motorcycle 28,000 miles each year, and you expect the motorcycle to get 50
miles per gallon of gasoline. The annual cost of insurance is $1,960, registration costs are $280 (good for two years), and
the price of gasoline is $2.20 per gallon. During this same two-year period, you will need to service your motorcycle 8
times, at $250 per service check, and obtain 8 oil changes. Each oil change costs $30. You will also need to replace your
tires 2 time(s) during this two-year period, and each time you replace your tires, it costs $300.
a. Calculate the total fixed cost, total variable cost, and cost per mile for the two-year period, and then complete the table
below.
Instructions: Round your answers for total fixed cost and total variable cost to the nearest whole number. Round your
answer for cost per mile to two decimal places.
Total Fixed Cost
$ 9800
Total Variable Cost
240
$
b. Suppose you want to lower the cost per mile. You should focus on:
fixed costs, because they must be paid.
fixed costs, because they represent a majority of the total costs.
variable costs, because they can be avoided.
variable costs, because they represent a majority of the total costs.
< Prev
Cost per Mile
$
10 of 10
-
Next >
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 5 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education