The City of Brewster Operated a Motor Pool Fund as an Internal

Multiple Choice

The City of Brewster operated a motor pool fund as an internal service fund.A loan of $600,000 was made from an enterprise fund,to be repaid over 10 years with no interest.Capital assets were purchased as follows: land,$200,000; buildings (40 year life) ,$800,000; equipment (10 year life) ,$300,000; automobiles (4 year life,) $1,250,000.In addition,fuel costs were expected to be $100,000 and salaries were expected to be $200,000.A budget is prepared to breakeven,using full accrual accounting,plus pay back one year's principal on the loan.It is anticipated that cars will be driven 2,000,000 miles.The cost per mile would be:

A) $0.39.
B) $0.33.
C) $0.36.
D) $0.23.