19.03.2023 - 12:40

Fred Carson delivers parts for several local auto parts stores. He charges clients $0.75 per mile driven. Fred has determined that if he drives 2,000 miles in a month, his average operating cost is $0.55 per mile. If he drives 4,000 miles in a month, his

Question:

Fred Carson delivers parts for several local auto parts stores. He charges clients {eq}$0.75 {/eq} per mile driven. Fred has determined that if he drives {eq}2,000 {/eq} miles in a month, his average operating cost is {eq}$0.55 {/eq} per mile. If he drives {eq}4,000 {/eq} miles in a month, his average operating cost is {eq}$0.40 {/eq} per mile. Fred has used the high-low method to determine that his monthly cost equation is:

Total Cost = {eq}$600 + $0.25 {/eq} per Mile.

Determine how many miles Fred needs to drive to break even. (Round intermediate calculations to 2 decimal places.)

Answers (1)
  • Elnora
    April 9, 2023 в 10:25
    To break even, Fred's total revenue should be equal to his total cost. Let x be the number of miles Fred needs to drive to break even. His revenue would be 0.75x (since he charges $0.75 per mile driven). His cost equation is given as Total Cost = $600 + $0.25 per Mile. Plugging x into this equation, we get: Total Cost = $600 + $0.25x To break even, revenue = cost: 0.75x = $600 + $0.25x 0.5x = $600 x = $1200 Therefore, Fred needs to drive 1200 miles to break even.
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