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What is the total fixed cost this month

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Question - A non-profit long-term care cooperative operates vans to transport mobility-impaired citizens. It experienced these costs last month:

Type of cost

Number of units

Cost/unit

Measurement




Principal and interest per van

3

$1,200

Monthly

Payment per manager

1

$4,000

Monthly

Payment per dispatcher

2

$3,000

Monthly

Drivers

4

$3,500

Monthly

Diesel

2

$3

Trip

Medical supplies

1

$3

Trip

Maintain van and equipment

1

$5

Trip

For this problem, each type of cost is either fixed or variable. We are obliged to pay principal and interest on the vans for the next five years. Our manager, dispatchers, and drivers have binding three-year contracts.

In recent years, we have been making a very steady 1,200 van trips per month.

a) What is the total fixed cost this month? Please take into account the number of units for costs that are fixed, along with the cost per unit.

b) What is the expected fixed cost per trip this month?

c) What is the variable cost per trip?

Reference no: EM133154601

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