Reference no: EM132556668

Hoi Chong Transport, Ltd. operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 178,000 kilometers during a year, the average operating cost is 14.5 cents per kilometer. If a truck is driven only 89,000 kilometers during a year, the average operating cost increases to 16.4 cents per kilometer. (The Singapore dollar is the currency used in Singapore.)

Required:

Question 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (Round the "Variable cost" to 3 decimal places.)

Question 2. Express the variable and fixed costs in the form Y = a + bX. (Round the "Variable cost" to 3 decimal places.)

Question 3. If a truck were driven 99,000 kilometers during a year, what total cost would you expect to be incurred? (Round your intermediate calculations to 3 decimal places.)