During the current year central auto rentals purchased 60

Question

During the current year, Central Auto Rentals purchased 60 new automobiles at a cost of $21,920 per car. The cars will be sold to a wholesaler at an estimated $4,000 each as soon as they have been driven 56,000 miles. Central Auto Rentals computes depreciation expense on its automobiles by the units-of-output method, based on mileage.

a. Compute the amount of depreciation to be recognized for each mile that a rental automobile is driven.(Round your answer to 2 decimal places.) b. Assuming that the 60 rental cars are driven a total of 1,620,000 miles during the current year, compute the total amount of depreciation expense that Central Auto Rentals should recognize on this fleet of cars for the year.