ABC Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 126,000 kilometers during a year, the average operating cost is 13.3 cents per kilometer. If a truck is driven only 84,000 kilometers during a year, the average operating cost increases to 15.5 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 105,000 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 Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet of trucks. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places.) Variable cost Fixed cost per kilometer per year

Cornerstones of Cost Management (Cornerstones Series)
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Author:Don R. Hansen, Maryanne M. Mowen
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Chapter16: Cost-volume-profit Analysis
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ABC Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 126,000 kilometers
during a year, the average operating cost is 13.3 cents per kilometer. If a truck is driven only 84,000 kilometers during a year, the
average operating cost increases to 15.5 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 105,000 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
Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated
with the fleet of trucks. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal
places.)
Variable cost
Fixed cost
per kilometer
per year
<Required 1
Required 2 >
Transcribed Image Text:ABC Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 126,000 kilometers during a year, the average operating cost is 13.3 cents per kilometer. If a truck is driven only 84,000 kilometers during a year, the average operating cost increases to 15.5 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 105,000 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 Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet of trucks. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places.) Variable cost Fixed cost per kilometer per year <Required 1 Required 2 >
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