Exercise 13-14 (Algo) Identification of Relevant Costs [LO13-1]Kristen Lu purchased a used automobile for $16,250 at the beginning of last year and incurred the following operating costs: Depreciation ($16,250 ÷ 5 years)$ 3,250 Insurance$ 1,700 Garage rent$ 900 Automobile tax and license$ 450 Variable operating cost$ 0.06per mile The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $3,250. The car is kept in a garage for a monthly fee. Required:1. Kristen drove the car 21,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.) 2. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks during spring break. What costs above are relevant in this decision? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) check all that applyVariable operating costsunansweredDepreciationAutomobile taxunansweredLicense costsunansweredInsurance costs Exercise 13-14 (Algo) Identification of Relevant Costs [LO13-1]Kristen Lu purchased a used automobile for $16,250 at the beginning of last year and incurred the following operating costs:$ 3,250$ 1,700$ 900$ 450$ 0.06 per mileDepreciation ($16,250 ÷ 5 years)InsuranceGarage rentAutomobile tax and licenseVariable operating costThe variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage,the car will have zero resale value in five years, so the annual straight-line depreciation is $3,250. The car is kept in a garage for amonthly fee.Required:1. Kristen drove the car 21,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round youranswers to 2 decimal places.)Average fixed cost per mileVariable operating cost per mileAverage cost per mile2$0.002. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeksduring spring break. What costs above are relevant in this decision? (You may select more than one answer. Single click the box withthe question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the boxfor a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)? Variable operating costsDepreciation? Automobile tax? License costs? Insurance costs

Answer-- Computation of Average cost per mile of owning and operating the car - Particulars…

Kristen Lu purchased a used automobile for $16,250 at the beginning of last year and incurred the following operating costs: Depreciation ($16,250 ÷ 5 years) $ 3,250 Insurance $ 1,700 Garage rent $ 900 Automobile tax and license $ 450 Variable operating cost $ 0.06 per mile The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $3,250. The car is kept in a garage for a monthly fee. Required: 1. Kristen drove the car 21,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.) 2. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks during spring break. What costs above are relevant in this decision? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) check all that apply Variable operating costsunanswered Depreciation Automobile taxunanswered License costsunanswered Insurance costs

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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Exercise 13-14 (Algo) Identification of Relevant Costs [LO13-1]

Kristen Lu purchased a used automobile for $16,250 at the beginning of last year and incurred the following operating costs:

Depreciation ($16,250 ÷ 5 years)	$ 3,250
Insurance	$ 1,700
Garage rent	$ 900
Automobile tax and license	$ 450
Variable operating cost	$ 0.06	per mile

The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $3,250. The car is kept in a garage for a monthly fee.

Required:

1. Kristen drove the car 21,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.)

2. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks during spring break. What costs above are relevant in this decision? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

check all that apply

Variable operating costsunanswered
Depreciation
Automobile taxunanswered
License costsunanswered
Insurance costs

Exercise 13-14 (Algo) Identification of Relevant Costs [LO13-1]
Kristen Lu purchased a used automobile for $16,250 at the beginning of last year and incurred the following operating costs:
$ 3,250
$ 1,700
$ 900
$ 450
$ 0.06 per mile
Depreciation ($16,250 ÷ 5 years)
Insurance
Garage rent
Automobile tax and license
Variable operating cost
The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage,
the car will have zero resale value in five years, so the annual straight-line depreciation is $3,250. The car is kept in a garage for a
monthly fee.
Required:
1. Kristen drove the car 21,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your
answers to 2 decimal places.)
Average fixed cost per mile
Variable operating cost per mile
Average cost per mile
2$
0.00
2. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks
during spring break. What costs above are relevant in this decision? (You may select more than one answer. Single click the box with
the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box
for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)
? Variable operating costs
Depreciation
? Automobile tax
? License costs
? Insurance costs

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