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Question - Donaldson Trucking uses cargo miles driven (CMD) as an activity base. The company reports the following breakdown of cost behaviors:
Fixed Costs per Year
License fees = $12,000
Insurance = $28,000
Depreciation = $160,000
Office & Clerical = $190,000
Variable Costs per CMD
Driver wages = $0.40/CMD
Fuel = $1.25/CMD
Semi-variable Costs/CMD
Maintenance & Service Costs = $10,000 + $0.35/CMD
Required -
1. What the intercept of the company's total cost graph?
2. What the slope of the company's total cost line?
3. What the company's estimated total cost at 1 million CMD?
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