Fixed and variable costs

 1: The Cost of Driving 1 unread of 1 messageThis is an opportunity to apply the math that we are learning to your own life. Click on “View Full Description” below for the directions and questions you must answer.View Full Description

One common type of calculation that is made frequently out there in the real world is a “fixed and variable cost problem” – it’s a “lump and per” scenario. You pay a fixed cost (or a lump sum) to rent the car, or have phone service. Then, in addition, you have to pay a variable cost (so much per mile or per minute). People use math all the time (or should!) to decide which company has the best plan for their needs.
For the purposes of this Forum, we are going to discuss a subject near and dear to everyone’s heart these days – the price of operating your vehicle. To do this, we need to collect three types of data – our fixed costs, our variable costs and our usage. If you either don’t own a car just borrow a friend’s data or use a hypothetical example based on internet research. One student even did the analysis on his aircraft carrier!
Please click on Start a New Conversation and make the subject of your post your car’s year and model (2009 Toyota Prius), so that people can tell at a glance which postings might be of the most interest to them.
Presenting data to others in a clear and understandable fashion is an important skill for many people in the workplace, not just mathematicians. For your initial post give a full and complete answer to the following questions in outline form, following this model. Be sure to actually answer the questions – do not get sidetracked on the current prices at the gas pump. Your initial post of at least 150 words will be worth 6 points. Substantive replies to at least 2 classmates of 50 words or more are worth a total of 4 points.
Although most Americans view their car expenses as an inevitable part of life and not part of their actual car calculations, we are going to figure out what our car expenses really are.
A – What are your fixed monthly car expenses? (1 point)
I want you to add up all the payments that you must make (car payment, garage rent, license tags, insurance, etc.)–regardless of whether or not old Betsy ever emerges from the garage. If you only pay insurance once a year then divide that number by 12 to add it to your monthly fixed expenses. You don’t have to share the specifics if you would prefer not to–you can just give the total.
B – What are your variable monthly car expenses? (1 point)
Add up your variable expenses—the ones that depend on how many miles you drive the car. Don’t get into the nitty-gritty of your car’s miles per gallon—just give an approximation of what you spend each month on variable expenses (gas, oil, washer fluid, car washes, etc.).
C – What is your total cost per month? (1 point)
Add your fixed and variable costs together.
D – Approximately how many miles do you drive a month? (1 point)
All of the discussion in the media is about the price of gasoline per gallon, but to calculate your personal cost, a more relevant statistic for you is your cost per mile. That is one of the things that you should consider when you decide whether or not to drive home for lunch.
E – Divide C by D to figure your cost per mile. (1 point)
Pay attention here. If the money is more than the miles, the cost is over $1.00 per mile – if the miles are more than the money, the cost is under $1.00 per mile. What is your cost per mile?

Surprised? One student did the calculations wrong and got that she was spending $316.00 a mile. That would go way beyond surprised!
F – What changes might you make to save money on your total car expenses? (1 point)
Another student lived in a big city and only used the car on weekends. When he finished the calculations, he cut a deal with a local car rental company, sold his car, and wound up renting a very nice car every weekend for less than he was spending on a car of his own!
Please sign ALL your Forum posts with the name that you like to be called – it makes it so much easier for the rest of us to address you by your preferred name when we respond.