EA7.

LO 2.2Western Trucking operates a fleet of delivery trucks. The fixed expenses to operate the fleet are $79,900 in March and rose to $93,120 in April. It costs Western Trucking $0.15 per mile in variable costs. In March, the delivery trucks were driven a total of 85,000 miles, and in April, they were driven a total of 96,000 miles. Using this information, answer the following:

What were the total costs to operate the fleet in March and April, respectively?

What were the cost per mile to operate the fleet in March and April, respectively?

(a) $92,650; $107,520

(b) $1.09 per mile; $1.12 per mile

Explanation:

(a) March:

Total cost to operate the aircraft:

= Fixed cost + Variable cost

= $79,900 + ($0.15 * 85,000 miles)

= $79,900 + $12,750

= $92,650

April:

Total cost to operate the aircraft:

= Fixed cost + Variable cost

= $93,120 + ($0.15 * 96,000 miles)

= $93,120 + $14,400

= $107,520

(b)

Total costs per mile to operate the fleet in March:

= Total cost in March : Miles flew in March

= $92,650 : 85,000

= $1.09 per mile

Total costs per mile to operate the fleet in April:

= Total cost in April : Miles flew in April

= $107,520 : 96,000

= $1.12 per mile