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
Related questions
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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education