6th Edition

ISBN: 9781307652789

Author: LANEN

Publisher: MCG/CREATE

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Textbook Question

Chapter 1, Problem 40P

Cost Data for Managerial Purposes

You have been asked by two of your friends, Marco and Jenna, to settle a (friendly) argument they are having about splitting the cost of a road trip during Spring Break. They will take Jenna’s car and they have agreed to “share the cost” of the drive. Based on current fuel prices and the mileage of Jenna’s car, the fuel cost is roughly $0.20 per mile. Marco says he should pay about $0.13 per mile for the fuel, plus a small amount ($0.03) for other variable costs (such as routine maintenance). Jenna says that he should pay 50 percent of $0.56, which is the current rate the Internal Revenue Service (IRS) allows for the use of a personal car. In addition to fuel and routine maintenance, the IRS rate is designed to cover “wear and tear” on the car. Marco argues that the wear and tear would occur whether he went on the trip or not.

Required

a. What would you recommend Marco pay Jenna per mile for sharing the car? Explain briefly.
b. Would your answer to Requirement (a) change depending on whether or not Jenna was going to take the trip, whether or not Marco went along? Explain briefly.

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Chapter 1, Problem 39P

Chapter 1, Problem 41P

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Chapter 1 Solutions

FUNDAMENTALS OF COST ACCOUNTING

Ch. 1 - Explain why it is important to consider the...Ch. 1 - Explain the differences between financial...Ch. 1 - Place the letter of the appropriate accounting...Ch. 1 - Distinguish among the value chain, the supply...Ch. 1 - Who are the customers of cost accounting?Ch. 1 - How can cost accounting information together with...Ch. 1 - Prob. 7RQ Ch. 1 - Does the passage of Sarbanes-Oxley mean that codes...Ch. 1 - Prob. 9CADQ Ch. 1 - Prob. 10CADQ

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Solution Summary: The author explains that the amount of payment to be made by Mr. M to Ms. J should include the charges of fuel plus the share in rate which Internal Revenue Service (IRS) allows for the use of a personal car

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