119. Unified Parcel, Inc., operates a local parcel delivery service. The company keeps detailed records relating to operating costs of trucks, and has found that if a truck is driven 110,000 miles per year the operating cost is 7.5 cents per mile. This cost increases to 8.75 cents per mile if a truck is driven 60,000 miles per year. Required: Estimate the cost formula for truck operating costs using the high-low method.
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- Estimating a cost function, high-low method. Reisen Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its 10 helicopters makes between 1,000 and 2,000 round-trips per year. The records indicate that a helicopter that has made 1,000 round-trips in the year incurs an average operating cost of $350 per round-trip, and one that has made 2,000 round-trips in the year incurs an average operating cost of $300 per round-trip. Using the high-low method, estimate the linear relationship y = a + bX , where y is the total annual operating cost of a helicopter and X is the number of round-trips it makes to JFK airport during the year. Give examples of costs that would be included in a and in b . 3. If Reisen Travel expects each helicopter to make, on average, 1,200 round-trips in the coming year, what should its estimated operating budget for the helicopter fleet be?Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful study by the company's cost analyst has determined that if a truck is driven 120,000 miles during a year, the average operating cost is 11.6 cents per mile. If a truck is driven only 80,000 miles during a year, the average operating cost increases to 13.6 cents per mile. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. 2. Express the variable and fixed costs in the form Y = a + bX. 3. If a truck were driven 100,000 miles during a year, what total cost would you expect to be incurred?a) Provincial Packages, Inc. operates a local parcel delivery service. The company keeps detailed records relating to operating costs of trucks, and has found that if a truck is driven 122,000 kilometres per year, the operating cost is 8.5 cents per kilometre. This cost increases to 9.25 cents per kilometre if a truck is driven 72,000 kilometres per year. Required: Estimate the cost formula for truck operating costs using the high-low method. Accessibility: Investigate Focus
- The Mayflower Transport Company operates a fleet of delivery trucks in the Ottawa area. It has been determined that if a truck is driven 105,000 kilometers over a one year period the average operating cost is $0.114 per kilometer. If a truck is driven only 70,000 kilometers annually, the operating costs increases to $0.134 per kilometer. a) Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. b) Using the formula Y=a + bX, present the fixed and variable costs. c) If a truck were driven 80,000 kilometers over a one year period, what total cost would your expect to be incurred?The Company wants to determine a fuel surcharge to add to its customers' bills based on the number of miles driven to each area. It wants to separate the fixed and variable portion of the truck's operating costs so it has a better idea of how distance affects these costs. the Company has the following data available. Month Miles driven Total operating costs January 16,200 $22,650 February 17,000 $23,250 March 20,000 $25,000 April 16,500 $22,875 May 17,400 $23,550 June 15,000 $22,000 Using the high-low method, the monthly operating costs if the Company drives 21,000 miles in a month will be (Round any intermediary calculations to the nearest cent.)Rundle Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,300 containers follows. Unit-level materials. Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Rundle for $2.60 each. Required a. Calculate the total relevant cost. Should Rundle continue to make the containers? b. Rundle could lease the space it currently uses in the manufacturing process. If leasing would produce $11,600 per month, calculate the total avoidable costs. Should Rundle continue to make the containers? Answer is complete but not entirely correct. $ a. Total relevant cost a. Should Rundle continue to make the containers? b. Total avoidable cost b. Should Rundle continue to make the containers? 190.650,000 Yes $24,180,000 $ 5,200 6,100 4,000 7,800…
- Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the sameequipment and labor; hence, there are no traceable fixed costs. Common fixed cost equals$30,000. Parker’s accountant has begun to assess the profitability of the two lines and has gathered the following data for last year: Required:1. Compute the number of vases and the number of figurines that must be sold for thecompany to break even.2. Parker Pottery is considering upgrading its factory to improve the quality of its products.The upgrade will add $5,260 per year to total fixed cost. If the upgrade is successful, theprojected sales of vases will be 1,500, and figurine sales will increase to 1,000 units. Whatis the new break-even point in units for each of the products?The accounting department at the corporate office has provided you with some historical cost data. Economy rentals cost $17.10 per day while luxury vehicles cost $25.12 per day. Regardless of vehicle type, a rental contract requires $8.90 for reconditioning. Additional vehicles can be delivered from the regional hub at a cost of $35/vehicle, on top of the costs above. Do you have any concerns about using this accounting data to set prices? Hint: Consider the difference between average and marginal cost. In addition to answering the questions above, provide pricing recommendations for economy vehicles for the next four weeks.Philippine Island Tours has incurred the following bus maintenance costs during the recent tourist season. Answer the following: Using the high-low method, determine which month is the highest? Using the high-low method, determine which month is the lowest? Using the high-low method, determine the variable cost per tour mile traveled. (Use this format 0..123) Using the high-low method, determine fixed cost per month (Use this format 10,000) Using the high-low method Develop a formula to express the cost behavior exhibited by the company’s maintenance cost. (Use this format Y=2a+10) Using the high-low method, predict the level of maintenance cost that would be incurring during the month of May when 34,000 tour miles are driven. (Use this format 10,000)
- Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $10 per unit, and fixed expenses total $190,000 per year. Its operating results for last year were as follows: Sales (23,000 units) Variable expenses Contribution margin Fixed expenses Operating income Required: Answer each question Independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in sales dollars. 3. Assume this year's total sales increase by $40,000. If the fixed expenses do not change, how much will operating Income Increase? Assume that the operating results for last year were as in the question data. 4-a. Compute the degree of operating leverage based on last year's sales. 4-b. The president expects sales to increase by 16% next year. Using the degree of operating leverage from last year, what percentage Increase in operating Income will the company realize this year?…Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completic 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…Flexgen Corporation uses trucks to transport bottles from the warehouse to different retail outlets. Gasoline costs are $0.25 per kilometre driven. Insurance costs are $5,500 per year. Calculate the total costs and the cost per kilometre for gasoline and insurance if the truck is driven (a) 21,000 kilometres per year or (b) 37,000 kilometres per year. Complete the table below. (Round the costs per kilometre to the nearest cent, $X.XX.) Total costs Cost per kilometre (a) Driven 21,000 kilometres (b) Driven 37,000 kilometres