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Magna Magna Corporation uses trucks to transport bottles from the warehouse to different retail outlets. Gasoline...

Magna Magna Corporation uses trucks to transport bottles from the warehouse to different retail outlets. Gasoline costs are $ 0.26 $0.26 per mile driven. Insurance costs are $ 7 comma 000 $7,000 per year. Calculate the total costs and the cost per mile for gasoline and insurance if the truck is driven​ (a) 16 comma 000 16,000 miles per year or​ (b) 35 comma 000 35,000 miles per year. ​(Round the cost per mile answers to the nearest​ cent, $X.XX.)

Solutions

Expert Solution

NOTE:

Variable cost per unit and Total fixed costs do not change with change in units.

a.Total cost=(0.26*16000)+$7000

=$11,160

Total Cost per mile=$11,160/16000

=0.70(Approx).

Cost per mile for gasoline=$0.26

Cost per mile for insurance=7000/16000=$0.44(Approx)

b.Total cost=(0.26*35000)+$7000

=$16,100

Total Cost per mile=$16100/35000

=0.46

Cost per mile for gasoline=$0.26

Cost per mile for insurance=7000/35000=$0.20

ekkarill92 answered 3 years ago
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