Kristen Lu purchased a used automobile for $16,750 at thebeginning of last year and incurred the following operatingcosts:
Depreciation($16,750 ÷ 5 years) $3,350 Insurance $1,700 Garage rent $900 Automobile tax andlicense $450 Variable operatingcost $0.13 permile
The variable operating cost consists of gasoline, oil, tires,maintenance, and repairs. Kristen estimates that, at her currentrate of usage, the car will have zero resale value in five years,so the annual straight-line depreciation is $3,350. The car is keptin a garage for a monthly fee.
Required:
1. Kristen drove the car 16,000 miles last year. Compute theaverage cost per mile of owning and operating the car.(Round your answers to 2 decimal places.)
Fixedcost per mile Variableoperating cost per mile Average cost per mile $0.00
2. Kristen is unsure about whether she should use her own car orrent a car to go on an extended cross-country trip for two weeksduring spring break. What costs above are relevant in thisdecision? (You may select more than one answer. Singleclick the box with a check mark for correct answers and doubleclick to empty the box for the wrong answers.)
Variable operating costs Depreciation Automobile tax License costs Insurance costs
Kristen Lu purchased a used automobile for $16,750 at thebeginning of last year and incurred the following operatingcosts: |
| Depreciation($16,750 ÷ 5 years) | $3,350 |
| Insurance | $1,700 |
| Garage rent | $900 |
| Automobile tax andlicense | $450 |
| Variable operatingcost | $0.13 permile |
The variable operating cost consists of gasoline, oil, tires,maintenance, and repairs. Kristen estimates that, at her currentrate of usage, the car will have zero resale value in five years,so the annual straight-line depreciation is $3,350. The car is keptin a garage for a monthly fee. |
| Required: |
| 1. | Kristen drove the car 16,000 miles last year. Compute theaverage cost per mile of owning and operating the car.(Round your answers to 2 decimal places.) | |||||||||||||||||||||||||||||||||
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