Daniel Is Trying to Decide Whether to Buy a Car

question 59

Multiple Choice

Daniel is trying to decide whether to buy a car or a truck. The truck he is considering will cost him a month in loan payments, and it gets miles per gallon in gas mileage. The car will cost a month in loan payments, but it gets miles per gallon in gas mileage. Daniel estimates that he will pay per gallon for gas. This means that the monthly cost to drive the truck miles will be The total monthly cost to drive the car miles will be The following figure shows the graph of each equation. At how many miles do the car and the truck cost the same to operate?

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Definitions:

Direct Labor Costs

These are the salaries and wages paid to employees directly involved in producing a company's goods or services.

Controllable Variance

Controllable variance refers to the difference between actual and expected figures that can be influenced by the actions of managers.

Overhead Costs

General expenses related to the operation of a business that are not directly attributed to creating a product or service.

Volume Variance

The difference between the budgeted and actual quantity of units sold or produced, affecting budget and operational planning.