Amarjit Truckers, Ltd. operates a fleet of delivery trucks in North America. The company has determined that, if a truck is driven 120,000 kilometres during a year, the average operating cost is 17000 cents per kilometre. If a truck is driven only 50,000 kilometres during a year, the average operating cost increases to 20.0 cents per kilometre. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation (Round the "Variable cost" to 5 decimal places. Round "Fixed cost" to 2 decimal places.) Variable cost Fixed cost per kilometre per year 2. Express the variable and fixed costs in the form Y=a+bX. (Round the "Variable cost" to 5 decimal places. Round "Fixed cost" to 2 decimal places.) 3. If a truck were driven 80,000 kilometres during a year, what total cost would you expect to be incurred? (Do not round Intermediate calculations. Round "Total annual cost" to 2 decimal places.) Total annual cost
Amarjit Truckers, Ltd. operates a fleet of delivery trucks in North America. The company has determined that, if a truck is driven 120,000 kilometres during a year, the average operating cost is 17000 cents per kilometre. If a truck is driven only 50,000 kilometres during a year, the average operating cost increases to 20.0 cents per kilometre. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation (Round the "Variable cost" to 5 decimal places. Round "Fixed cost" to 2 decimal places.) Variable cost Fixed cost per kilometre per year 2. Express the variable and fixed costs in the form Y=a+bX. (Round the "Variable cost" to 5 decimal places. Round "Fixed cost" to 2 decimal places.) 3. If a truck were driven 80,000 kilometres during a year, what total cost would you expect to be incurred? (Do not round Intermediate calculations. Round "Total annual cost" to 2 decimal places.) Total annual cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Amarjit Truckers, Ltd. operates a fleet of delivery trucks in North America. The company has determined that, if a truck is driven
120.000 kilometres during a year, the average operating cost is 17.000 cents per kilometre. If a truck is driven only 50.000 kilometres
during a year, the average operating cost increases to 20.0 cents per kilometre.
Required:
1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (Round the
"Variable cost" to 5 decimal places. Round "Fixed cost" to 2 decimal places.)
Variable cost
Fixed cost
per kilometre
per year
2. Express the variable and fixed costs in the form Y=a + bX. (Round the "Variable cost" to 5 decimal places. Round "Fixed cost" to
2 decimal places.)
Total annual cost
X
3. If a truck were driven 80,000 kilometres during a year, what total cost would you expect to be incurred? (Do not round Intermediate
calculations. Round "Total annual cost" to 2 decimal places.)
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