Exercise 2-8 Cost Behavior; High-Low Method [LO2-4, LO2-5] Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 96,000 kilometers during a year, the average operating cost is 10.3 cents per kilometer. If a truck is driven only 64,000 kilometers during a year, the average operating cost increases to 11.5 cents per kilometer. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places and Fixed cost answer to nearest whole dollar amount.) Kilometers Total Annual Driven Cost High level of activity Low level of activity Change Variable cost per kilometer per kilometer Fixed cost per year 2. Express the variable and fixed costs in the form Y = a + bX. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places.) Y = 3. If a truck were driven 80,000 kilometers during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations.) Total annual cost
Exercise 2-8 Cost Behavior; High-Low Method [LO2-4, LO2-5] Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 96,000 kilometers during a year, the average operating cost is 10.3 cents per kilometer. If a truck is driven only 64,000 kilometers during a year, the average operating cost increases to 11.5 cents per kilometer. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places and Fixed cost answer to nearest whole dollar amount.) Kilometers Total Annual Driven Cost High level of activity Low level of activity Change Variable cost per kilometer per kilometer Fixed cost per year 2. Express the variable and fixed costs in the form Y = a + bX. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places.) Y = 3. If a truck were driven 80,000 kilometers during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations.) Total annual cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![Exercise 2-8 Cost Behavior; High-Low Method [LO2-4, LO2-5]
Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 96,000 kilometers during a year, the average operating cost is 10.3 cents per kilometer. If a truck is driven
only 64,000 kilometers during a year, the average operating cost increases to 11.5 cents per kilometer.
Required:
1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places and
Fixed cost answer to nearest whole dollar amount.)
Kilometers
Total Annual
Driven
Cost
High level of activity
Low level of activity
Change
$
Variable cost per kilometer
per kilometer
Fixed cost per year
2. Express the variable and fixed costs in the form Y = a + bX. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places.)
3. If a truck were driven 80,000 kilometers during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations.)
Total annual cost](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff8151a55-1f97-4293-9574-706e6f6ba5ac%2Ff5dc0f1e-21e7-4923-9370-0606b1683368%2F202qhn_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 2-8 Cost Behavior; High-Low Method [LO2-4, LO2-5]
Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 96,000 kilometers during a year, the average operating cost is 10.3 cents per kilometer. If a truck is driven
only 64,000 kilometers during a year, the average operating cost increases to 11.5 cents per kilometer.
Required:
1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places and
Fixed cost answer to nearest whole dollar amount.)
Kilometers
Total Annual
Driven
Cost
High level of activity
Low level of activity
Change
$
Variable cost per kilometer
per kilometer
Fixed cost per year
2. Express the variable and fixed costs in the form Y = a + bX. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places.)
3. If a truck were driven 80,000 kilometers during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations.)
Total annual cost
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