1. Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet of trucks. 2. Express the variable and fixed costs in the form Y = a + bX. 3. If a truck were driven 80,000 kilometers during a year, what total operating cost would you expect to be incurred?
1. Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet of trucks. 2. Express the variable and fixed costs in the form Y = a + bX. 3. If a truck were driven 80,000 kilometers during a year, what total operating cost would you expect to be incurred?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hoi Chong Transport, Limited, operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven
105,000 kilometers during a year, the average operating cost is 11.4 cents per kilometer. If a truck is driven only 70,000 kilometers
during a year, the average operating cost increases to 13.4 cents per kilometer.
Required:
1. Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with
the fleet of trucks.
2. Express the variable and fixed costs in the form Y = a +bX.
3. If a truck were driven 80,000 kilometers during a year, what total operating cost would you expect to be incurred?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Answer is complete but not entirely correct.
If a truck were driven 80,000 kilometers during a year, what total operating cost would you expect to be incurred? (Do not
round intermediate calculations.)
Total annual cost
$ 8,624
< Required 2
Required 3 >
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