Estimating costs based on behavior patterns Terry estimates that the costs of insurance, license, and depreciation to operate his car total $430 per month and that the gas, oil, and maintenance costs are 80 cents per mile. Terry also estimates that, on average, he drives his car 2,000 miles per month. Required:a. How much cost would Terry expect to incur during July if he drove the car 2,342 miles?b. Would it be meaningful for Terry to calculate an estimated average cost per mile for a typical 2,000-mile month? Explain your answer.
Estimating costs based on behavior patterns Terry estimates that the costs of insurance, license, and depreciation to operate his car total $430 per month and that the gas, oil, and maintenance costs are 80 cents per mile. Terry also estimates that, on average, he drives his car 2,000 miles per month. Required:a. How much cost would Terry expect to incur during July if he drove the car 2,342 miles?b. Would it be meaningful for Terry to calculate an estimated average cost per mile for a typical 2,000-mile month? Explain your answer.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 1CE: The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:...
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Estimating costs based on behavior patterns Terry estimates that the costs of insurance, license, and
Required:
a. How much cost would Terry expect to incur during July if he drove the car 2,342 miles?
b. Would it be meaningful for Terry to calculate an estimated average cost per mile for a typical 2,000-mile month? Explain your answer.
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