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

According 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?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions. The YouTube video link below is a narration of the blog post article (no discussion questions are included in the YouTube video; those can be assigned separately.)

• Student handout (pdf) (word) (contains entire blog posting + discussion questions)
• PowerPoint file (brief article overview + discussion questions)
• YouTube video (narrated article in shareable YouTube link)

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