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Question(s) / Instruction(s):
Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful study by the company?s cost analyst has determined that if a truck is driven 120,000 miles during a year, the average operating cost is 11.6 cents per mile. If a truck is driven only 80,000 miles during a year, the average operating cost increases to 13.6 cents per mile.

Required:
1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation.
2. Express the variable and fixed costs in the form Y = a + bX.
3. If a truck were driven 100,000 miles during a year, what total cost would you expect to be incurred?


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