Chichi purchased a used Honda CRV for RM8,000 at the beginning of last year andincurred the following operating costs:B.Depreciation (RM8,000/5 years)InsuranceParking space feeRoad tax and licenseRM 1,600RM 1,200RM 360RM40Variable operating costRM 0.14 per kmThe variable operating cost consists of petrol, oil, tyres, maintenance and repairs. Chichiestimates that, at her current rate of usage, the car will have zero resale value in five (5)years, so the annual straight-line depreciation is RMI,600. Chichi pay the parking spacefor a monthly fee. (c) Chichi is thinking about buying an expensive sport car to replace the car she boughtyear. She would drive the same number of km regardless of which car sheowns and would rent the same parking space. The sport car's variable operatingcosts would be roughly the same as the variable operating costs of her existing car.However, her insurance and road tax and license costs would go up. Explain andidentify which costs are relevant in estimating the incremental costs of owning themore expensive car.last

Relevant cost is the costs which are relevant or important when preparing the financial statement of…

Chichi purchased a used Honda CRV for RM8,000 at the beginning of last year and incurred the following operating costs: B. Depreciation (RM8,000/5 years) Insurance Parking space fee Road tax and license RM 1,600 RM 1,200 RM 360 40 RM Variable operating cost RM 0.14 per km The variable operating cost consists of petrol, oil, tyres, maintenance and repairs. Chichi estimates that, at her current rate of usage, the car will have zero resale value in five (5) years, so the annual straight-line depreciation is RMI,600. Chichi pay the parking space for a monthly fee.

Chichi purchased a used Honda CRV for RM8,000 at the beginning of last year and incurred the following operating costs: B. Depreciation (RM8,000/5 years) Insurance Parking space fee Road tax and license RM 1,600 RM 1,200 RM 360 40 RM Variable operating cost RM 0.14 per km The variable operating cost consists of petrol, oil, tyres, maintenance and repairs. Chichi estimates that, at her current rate of usage, the car will have zero resale value in five (5) years, so the annual straight-line depreciation is RMI,600. Chichi pay the parking space for a monthly fee.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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