Studdy AI Logo
Math  /  Data & Statistics

QuestionTwo years ago Ernest Dorsey purchased a used sports coupe for $8,000.00 that is now worth $6,000.00. Last year he drove it 13,569 miles and kept a record of all expenses. His variable costs were gasoline, $1,589.56; oil changes, $245.98; and repairs, $548.11. His fixed costs were insurance, $1,105.32, and license, $85.00.\text{Two years ago Ernest Dorsey purchased a used sports coupe for } \$8,000.00 \text{ that is now worth } \$6,000.00. \text{ Last year he drove it 13,569 miles and kept a record of all expenses. His variable costs were gasoline, } \$1,589.56; \text{ oil changes, } \$245.98; \text{ and repairs, } \$548.11. \text{ His fixed costs were insurance, } \$1,105.32, \text{ and license, } \$85.00. Find the cost per mile.\text{Find the cost per mile.}

Studdy Solution

STEP 1

1. The cost per mile is calculated by dividing the total costs (both variable and fixed) by the total miles driven.
2. The depreciation of the car is considered a cost and is calculated as the difference between the purchase price and the current value.

STEP 2

1. Calculate the total variable costs.
2. Calculate the total fixed costs.
3. Calculate the depreciation cost.
4. Sum all costs to find the total cost.
5. Calculate the cost per mile.

STEP 3

Calculate the total variable costs:
Gasoline=$1,589.56\text{Gasoline} = \$1,589.56 Oil changes=$245.98\text{Oil changes} = \$245.98 Repairs=$548.11\text{Repairs} = \$548.11
Total variable costs:
$1,589.56+$245.98+$548.11=$2,383.65\$1,589.56 + \$245.98 + \$548.11 = \$2,383.65

STEP 4

Calculate the total fixed costs:
Insurance=$1,105.32\text{Insurance} = \$1,105.32 License=$85.00\text{License} = \$85.00
Total fixed costs:
$1,105.32+$85.00=$1,190.32\$1,105.32 + \$85.00 = \$1,190.32

STEP 5

Calculate the depreciation cost:
Purchase price=$8,000.00\text{Purchase price} = \$8,000.00 Current value=$6,000.00\text{Current value} = \$6,000.00
Depreciation cost:
$8,000.00−$6,000.00=$2,000.00\$8,000.00 - \$6,000.00 = \$2,000.00

STEP 6

Sum all costs to find the total cost:
Total variable costs=$2,383.65\text{Total variable costs} = \$2,383.65 Total fixed costs=$1,190.32\text{Total fixed costs} = \$1,190.32 Depreciation cost=$2,000.00\text{Depreciation cost} = \$2,000.00
Total cost:
$2,383.65+$1,190.32+$2,000.00=$5,573.97\$2,383.65 + \$1,190.32 + \$2,000.00 = \$5,573.97

STEP 7

Calculate the cost per mile:
Total miles driven=13,569\text{Total miles driven} = 13,569
Cost per mile:
$5,573.9713,569≈$0.4105\frac{\$5,573.97}{13,569} \approx \$0.4105
The cost per mile is approximately:
$0.41\boxed{\$0.41}

Was this helpful?

Studdy solves anything!

banner

Start learning now

Download Studdy AI Tutor now. Learn with ease and get all help you need to be successful at school.

ParentsInfluencer programContactPolicyTerms
TwitterInstagramFacebookTikTokDiscord