Problem
Rosco Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs, Each cab is expected to be driven 142,000 miles. Taxi no. 10 cost $32,000 and is expected to have a salvage value of $720. Taxi no. 10 is driven 35, 500 miles in year 1 and 25,000 miles in year 2. Calculate depreciation cost per mile using unit-of-activity method.