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

Question

The total operating cost for a truck is $400 000 per year. The percentage breakdown of this total amount was 40 percent fixed costs, 30 percent fuel, 20 percent finance, 10 percent maintence. Suppose the fuel price increases from $1.50 to $160 per liter. How much does this add to the total operating cost per year?

Answer 1

 

I am assuming that the price is raised from $1.50 to $1.60 per liter.

 

Currently. the fuel costs account for 30% of the operating costs.

30% of 400,000 = .30 • 400,000 = 120,000

 

We divide that number (120,000) by 1.50, to determine the number of liters used annually.

120,000 ÷ 1.50 = 80,000

 

If the price per liter is raised to 1.60, the fuel costs would increase to $1.60 • 80,000 = 128,000.

 

128,000 = 120,000 = 8000

 

The increase in price from $1.50 to $1.60 will increase operating costs by $8,000.

Answer 2

Jes,

The original fuel cost was 30% of 400,000 or $120,000.

 

If the previous cost was 1.50/L, then 120,000/1.5 = 80,000L/yr

 

The extra $0.10/L thus adds .1(80,000) = $8,000.00 /yr

 

I am assuming that the $160/L was just a typo. I hope this helps.