Part 1 Exercise #1 Monokuma has a four cars for its sales representatives. The business manager estimates running costs as follows: The cars were purchased two years ago and the total purchase price is $55,000. The cars have an estimated useful life of six years and can be traded in for $4,000 at the end of their estimated useful life. Monokuma depreciates vehicles on a straight-line basis. Petrol and oil cost $0.18 per km. Tyres are replaced after 28,000 kms. Each tyre costs $200 and fitting and balancing charges are $25 per set. Maintenance costs average $300 per car annually. AA membership, tax and insurance cost $350 per car annually. Required: Calculate the annual running costs by classifying the costs in terms of fixed, stepped and variable costs. Assume the cars travel: 14,000 kms per annum. 28,000 kms per annum.
Part 1 Exercise #1 Monokuma has a four cars for its sales representatives. The business manager estimates running costs as follows: The cars were purchased two years ago and the total purchase price is $55,000. The cars have an estimated useful life of six years and can be traded in for $4,000 at the end of their estimated useful life. Monokuma depreciates vehicles on a straight-line basis. Petrol and oil cost $0.18 per km. Tyres are replaced after 28,000 kms. Each tyre costs $200 and fitting and balancing charges are $25 per set. Maintenance costs average $300 per car annually. AA membership, tax and insurance cost $350 per car annually. Required: Calculate the annual running costs by classifying the costs in terms of fixed, stepped and variable costs. Assume the cars travel: 14,000 kms per annum. 28,000 kms per annum.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Part 1
Exercise #1
Monokuma has a four cars for its sales representatives. The business manager estimates running costs as follows:
- The cars were purchased two years ago and the total purchase price is $55,000. The cars have an estimated useful life of six years and can be traded in for $4,000 at the end of their estimated useful life. Monokuma
depreciates vehicles on a straight-line basis. - Petrol and oil cost $0.18 per km.
- Tyres are replaced after 28,000 kms. Each tyre costs $200 and fitting and balancing charges are $25 per set.
- Maintenance costs average $300 per car annually.
- AA membership, tax and insurance cost $350 per car annually.
Required:
Calculate the annual running costs by classifying the costs in terms of fixed, stepped and variable costs. Assume the cars travel:
- 14,000 kms per annum.
- 28,000 kms per annum.
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