Question

The total operating cost for the truck is $400 000 per year. The percentage breakdown of this total amount was:

40%: Fixed costs (insurance, registration, wages)
30%: Fuel
20%: Finance
10%: Maintenance (service, repairs, tyres)

Suppose the fuel price increases from $1.50 to $1.60 per litre.

How much does this add to the total operating cost per year?

Answer 1

30% x 400,000 = 120,000
1.5 -> 1.6 = 6.6666667% increase.

120,000 x 1.06666667 = 128,000

Therefore the new operating cost is 128,000 + 280,000 or $408,000.