We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is driven 150,000 kilometres during a year, the average operating cost is 11.9 cents ($0.119) per kilometre. If a truck is driven only 94,000 kilometres during a year, the average operating cost increases to 13.9 cents ($0.139) per kilometre. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (Do not round your intermediate calculations. Round the "Variable cost per kilometer" to 3 decimal places.) High level of activity Low level of activity Change Variable cost per kilometer Fixed cost per year Kilometers Driven Total Annual Cost 2. Express the variable and fixed costs in the form Y = a +bX. (Do not round your intermediate calculations. Round the "Variable cost per kilometer" decimal places.) Total annual cost 3. If a truck were driven 127,000 kilometres during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations. Round the "Variable cost per kilometer" to 3 decimal places.)

We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is driven 150,000 kilometres during a year, the average operating cost is 11.9 cents ($0.119) per kilometre. If a truck is driven only 94,000 kilometres during a year, the average operating cost increases to 13.9 cents ($0.139) per kilometre. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (Do not round your intermediate calculations. Round the "Variable cost per kilometer" to 3 decimal places.) High level of activity Low level of activity Change Variable cost per kilometer Fixed cost per year Kilometers Driven Total Annual Cost 2. Express the variable and fixed costs in the form Y = a +bX. (Do not round your intermediate calculations. Round the "Variable cost per kilometer" decimal places.) Total annual cost 3. If a truck were driven 127,000 kilometres during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations. Round the "Variable cost per kilometer" to 3 decimal places.)

Name: We Deliver operates a fleet of delivery trucks in Halifax. Analysis s
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Description: We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is driven 150,000 kilometres during a year, theaverage operating cost is 11.9 cents ($0.119) per kilometre. If a truck is driven only 94,000 kilometres during

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 11P: Emerald Island Company is considering building a manufacturing plant in County Kerry. Predicting...

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