Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 105,000 kilometers during a year, the average operating cost is 11.40 cents per kilometer. If a truck is driven only 70,000 kilometers during a year, the average operating cost increases to 13.40 cents per kilometer.(The Singapore dollar is the currency used in Singapore.)
Using the high low method, estimate the variable cost and fixed cost elements of the annual cost of the truck operation.
What is the Fixed cost/yr
What is the variable cost/km?