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# Total Maintenance Cost of a Truck

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A large rear dump truck working in a coal mining operation under good conditions has a current purchase price of \$ 2,000,000, including \$ 200,000 for the initial cost of six tyres. What is the net capital cost?

If the repair factor is 0.25 x 10-4 and for good conditions the job factor is 0.8, determine the estimated repair cost per operating hour?

If major overhaul costs are estimated at 15% of the net capital cost and this occurs every 20,000 hours determine the major overhaul cost per operating hour?

If maintenance labour costs are \$40/ person hour, a single maintenance person is required and the maintenance labour requirement is estimated at 0.8 person hours per operating hour determine the maintenance labour cost?

Determine the total maintenance cost?

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#### Solution Preview

a. Net capital cost = Total cost less the cost of tyres = 2,000,000-200,000 = \$1,800,000

b. Estimated repair cost per operating hour = Net capital cost ...

#### Solution Summary

The solution explains how to calculate the total maintenance cost

\$2.19
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## Speedy Parcel Service: high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation.

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 138,000 miles during a year, the average operating cost is 14.8 cents per mile. If a truck is driven only 92,000 miles during a year, the average operating cost increases to 18.6 cents per mile.

Required:
1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (Round the "Variable cost per mile" to 3 decimal places and the "Fixed cost" to the nearest dollar amount. Omit the "\$" sign in your response.)

Variable cost \$
per mile
Fixed cost \$
per year
________________________________________

2. Express the variable and fixed costs in the form Y = a + bX. (Round the "Variable cost per mile" to 3 decimal places and the "Fixed cost" to the nearest dollar amount. Omit the "\$" sign in your response.)

Y = \$
+ \$
X

3. If a truck were driven 115,000 miles during a year, what total cost would you expect to be incurred? (Round the "Variable cost per mile" to 3 decimal places. Round your intermediate and final answers to the nearest dollar amount. Omit the "\$" sign in your response.)

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