Exercise 5A-3 (Algo) Cost Behavior; High-Low Method [LO5-10] Hoi Chong Transport, Limited, operates a fleet of delivery trucks in Singapore. The company knows if a truck is driven 153,000 kilometers during a year, the average operating cost is 12.5 cents per kilometer. If a truck is driven only 102,000 kilometers during a year, the average operating cost increases to 15.4 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 127,000 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. Note: 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 >
Exercise 5A-3 (Algo) Cost Behavior; High-Low Method [LO5-10] Hoi Chong Transport, Limited, operates a fleet of delivery trucks in Singapore. The company knows if a truck is driven 153,000 kilometers during a year, the average operating cost is 12.5 cents per kilometer. If a truck is driven only 102,000 kilometers during a year, the average operating cost increases to 15.4 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 127,000 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. Note: 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 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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