of fixed and variable costs. Fixed costs are associated with ownership 

 and do not vary because of use. They inchide antifreeze, license, registra- 

 tion, and insurance. Variable costs have a definite and fairly constant 

 relationship to miles traveled and include gas, tires, oil, and lubrication. 

 Finally, some costs are both fixed and varialile in nature including main- 

 tenance and repairs, depreciation, interest, and property taxes. 



The method of determining each of these costs is shown in Appen- 

 dix B. For each type of truck the cost at each daily mileage level was 

 determined. The costs were then summed to develop a curve showing 

 total daily costs per truck at each daily mileage level. This is shown in 

 Figure 7 for the two truck sizes. The daily mileage traveled by each 

 truck of each firm was applied against these curves to develop the total 

 daily truck costs for each firm. 



Figure 7. Cost of Truck Operation at Various Levels of Use. 



50 



100 150 200 



Level of truck use — miles per day 



250 



300 



Total Costs of Assembly 



For any given density level assembly cost per pound rises as size 

 of assembly firm increases. Table 6 shows the per pound costs of assem- 

 bly for each of the six model firms at the three density levels. 



28 



