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Calculate the average cost per kilometre of owning the car

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Melissa McKenzie purchased a second-hand car off Trade Me at the beginning of last year for $10 000. During the year she has owned the car, she has incurred the following expenses.

Depreciation 2 000
Insurance 960
Garage rent 480
Warrant of Fitness fees 60
Variable operating costs/km 0.08

Variable operating costs consist of fuel, oil, tyres, maintenance and repairs. Melissa expects the car to have zero resale value after using it for another 5 years. She has decided to depreciate her car using the straight-line depreciation method over the full 5 years. The car is kept in a garage for a $40 per month fee.

Required:

Problem 1: If Melissa drove the care 10 000km last year, calculate the average cost per kilometre of owning and operating the car. Show all your workings.

Reference no: EM132690273

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