do part B Do not give answer in image Cost-volume-profit analysis can also be used in making personal financial decisions. For example, the purchase of a new car is one ofyour biggest personal expenditures. It is important that you carefully analyze your options.Suppose that you are considering the purchase of a hybrid vehicle. Let's assume the following facts. The hybrid will initially cost anadditional $5,000 above the cost of a traditional vehicle. On average, the hybrid will get 60 miles per gallon of gas, and the traditionalcar will get 30 miles per gallon. Also, assume that the cost of gas is $1.20 per gallon.Using the facts above, answer the following questions.(a)Your answer is correct.For gasoline, what is the unit variable cost of going one mile in the hybrid car? What is the unit variable cost of going one mile inthe traditional car? (Round answers to 2 decimal places, e.g. 0.25.)Variable gasoline costHybrid car0.02$Traditional car0.04 (b)Using the information in above part, if "miles" is your unit of measure, what is the differential between the hybrid vehicle and thetraditional vehicle? That is, express the variable cost savings on a per-mile basis. (Round answer to 2 decimal places, e.g. 0.25.)Savings per mile$CACAC

Variable costs are costs that vary with the change in the level of output.The contribution margin…

Answered: Cost-volume-profit analysis can also be…

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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Cost-volume-profit analysis can also be used in making personal financial decisions. For example, the purchase of a new car is one of your biggest personal expenditures. It is important that you carefully analyze your options.Suppose that you are considering the purchase of a hybrid vehicle. Let’s assume the following facts. The hybrid will initially cost an additional $3,780 above the cost of a traditional vehicle. The hybrid will get 50 miles per gallon of gas, and the traditional car will get 40 miles per gallon. Also, assume that the cost of gas is $3.60 per gallon.Using the facts above, answer the following questions. a) What is the variable gasoline cost going one mile in a hybrid car? What is the variable gasoline cost going one mile in a traditional car? b) Using the information in above part, if “miles” is your unit of measure, what is the “contribution margin” of the hybrid vehicle relative to the traditional vehicle? That is, express the variable cost savings on a per-mile…
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View Policies Current Attempt in Progress Cost-volume-profit analysis can also be used in making personal financial decisions. For example, the purchase of a new car is one of your biggest personal expenditures. It is important that you carefully analyze your options. Suppose that you are considering the purchase of a hybrid vehicle. Let's assume the following facts. The hybrid will initially cost an additional $5,500 above the cost of a traditional vehicle. On average, the hybrid will get 45 miles per gallon of gas, and the traditional car will get 27 miles per gallon. Also, assume that the cost of gas is $2.70 per gallon. Using the facts above, answer the following questions. (a) For gasoline, what is the unit variable cost of going one mile in the hybrid car? What is the unit variable cost of going one mile in the traditional car? (Round answers to 2 decimal places, e.g. 0.25.) Variable gasoline cost $ eTextbook and Media Save for Later Hybrid car Traditional car Attempts: 0 of 1…
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You have just graduated from college and are looking to buy your first car. Money is tight right now, so you are concerned with initial cost as well as ongoing expenses. At the same time, you don't want to drive a slow, outdated car like your parents do. You have narrowed your choices down to two vehicles: a Honda Enigma and a Bizzarrini Booster. Based on the numbers below, calculate the value index for each car. Which car provides you with the greatest value? Click the icon to view the data table. The value index for Honda Enigma is. (Enter your response as a whole number) The value index for Bizzarrini Booster is (Enter your response as a whole number) provides the greatest total value index A The More Info The Dimension Fuel economy Reliability Speed and handling Aesthetics After-sales support Purchase price Honda Enigma Print Bizzarrini Booster Importance to you 3 54424 Honda Enigma value index for each car. Which car provides you with the greatest value? Click the icon to view the…
6. (Note, for this question, you may find information from the live session in Module 4 useful.) You are making a decision about purchasing a new car. You can choose between an electric vehicle that requires very high upfront costs, a somewhat cheaper hybrid vehicle and a traditional gasoline powered vehicle. Your discount rate for future cash flows is 10%. The upfront cost of each car is: Electric: $80,000 Hybrid: $60,000 Gas: $45,000 In the first year you estimate the running costs (including fuel, insurance, maintenance etc.) to be: Electric: $2,000 Hybrid: $5,000 Gas: $7,500 You assume that these costs will increase at an inflation rate of 5%. That is, year 2 costs will be 5% higher than year 1 costs and year 3 costs will be 5% higher than year 2 costs. a) You plan to keep the car for 10 years. For each car, calculate the present value of your costs. Which one ends costing less in present value terms? (1 pt) b) If instead you wanted to replace the car after 5 years, what would now…
using excelAssume you've graduated and get the dream job and need transportation to go to work (problem definition)-so you need to purchase a car (objective).You would like to analyze your financial options to purchase the car you want andat the same time spent the minimum possible (decision making criteria).You prefer to pay around 3000$/year (requirements)but if it helps to reduce the cost you can pay more.Explore the options of (compare alternatives to save $) 1- Getting a loan of 20K over 5 years at 5%, how much is your yearly payments. Hint: (=PMT(i,n,p) ) 2- Searching for a better loan at 4%- how much you save? (compare total interest paid I1-I2)3- Try to pay up your loan quicker like 3 years- See how much you save in Interest paid. (compare total interest paid ) 4 - Negotiated the purchase down to 18.5K and see how much you save in interest. (compare total interest paid as well as the total paid) 5- Put down more money at the…
Suppose you drive an average of 18,000 miles per year, and you need a new vehicle. You are looking at two possible vehicles. One is a compact car that averages 40 MPG in city and highway driving. The other is an SUV that averages 13 MPG city and highway. The compact car uses regular fuel, which averages about $3.99 per gallon. The SUV uses premium fuel, which averages $4.19 per gallon. How many fewer gallons of gas will you use annually if you purchase the compact car?
Suppose that your car should be sold now for $5000. Is this a sunk cost? Give the explanation.
A company is trying to decide whether to buy a new delivery truck to replace their old one. The old truck originally cost $32,000. The new truck will cost $45,000. If they buy the new truck, they will sell the old truck to a used truck dealer for $4,000. Based on the information given, what is the immediate total incremental cost or benefit of buying the new truck? (Indicate a net benefit as a positive number and a net cost as a negative number.)
You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $14,000 to purchase and which will have OCF of −$1,200 annually throughout the vehicle’s expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $20,000 to purchase and which will have OCF of −$650 annually throughout that vehicle’s expected 4-year life. Both cars will be worthless at the end of their life. You intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future. If the business has a cost of capital of 12 percent, calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)

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