Question

A motor vehicle has annual depreciation of $2,800; oil changes cost $140, automobile insurance $580 annually, and license plates costs $140 . What is the annual amount of the total fixed operating cost for this vehicle?

Multiple Choice

• $2,940

• $3,380

• $2,800

• $3,520

• $3,660

Answer 1

Solution :

The total fixed operating costs for a vehicle are = Annual Depreciation + Automobile Insurance + License plates

Oil changes cost is a variable operating cost.

As per the information given in the question we have

Annual depreciation = $ 2,800 ; Automobile insurance = $ 580 ; License plates costs = $140 ;

Thus the annual amount of the total fixed operating cost for this vehicle is

= $ 2,800 + $ 580 + $ 140 = $ 3,520             

The solution is option 4 = $ 3,520