Exercise $5$A$-3($Algo$)$ Cost Behavior; High$-$Low Method $[$LO$5-10]$

$1\mathrm{.}5$

points

Hoi Chong Transport, Limited, operates a fleet of delivery trucks in Singapore. The company knows if a truck is driven $174,000$ kilometers during a year, the average operating cost is $13\mathrm{.}8$ cents per kilometer. If a truck is driven only $116,000$ kilometers during a year, the average operating cost increases to $17\mathrm{.}7$ cents per kilometer.

Required:

Using the high$-$low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet of trucks.

Express the variable and fixed costs in the form $Y=a+bx.$

If a truck were driven $145,000$ kilometers during a year, what total operating cost would you expect to be incurred?

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Required $1$

Express the variable and fixed costs in the form $Y=a+bx.$

Note: Do not round your intermediate calculations. Round the Variable cost per kilometer to $3$ decimal places.