5.4 Accounting in the Headlines: Costs

Are the costs of owning a car fixed, variable, or mixed?

car-costsAccording to a recent news article in the Wall Street Journal (“Mercedes or Ford, It Costs a Lot More Than You Think,” Wall Street Journal, Sunday Journal, March 15, 2014), the average consumer spends more than $760 a month on his/her vehicle and related expenses.

  •          Purchase price of the car
  •          Finance charges on car loan
  •          Gas
  •          Oil changes
  •          Routine maintenance
  •          Tires
  •          Insurance
  •          License plate/registration
  •          SiriusXM Radio subscription cost
  •          Car washes
  •          Garage/parking
  •          Parking tickets
  •          Speeding tickets
  •          Value of car owner’s time spent commuting


Questions

  1.        Which of the costs above would most likely be variable with respect to the number of miles the car owner drives?
  2.        Which of the costs above would most likely be fixed with respect to the number of miles the car owner drives?
  3.        Which of the costs above would most likely be mixed with respect to the number of miles the car owner drives?


Licenses and Attributions

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