The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage,the car will have zero resale value in five years, so the annual straight-line depreciation is $6,250. The car is kept in a garage for amonthly fee.Required:1. Kristen drove the car 24,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round youranswers to 2 decimal places.)Average fixed cost per mileVariable operating cost per mileAverage cost per mile2. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeksduring spring break. What costs above relevant in this decision? (You may select more than one answer. Single click the box withthe question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the boxfor a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)Variable operating costs? DepreciationAE? Automobile tax? License costs? Insurance costs Kristen Lu purchased a used automobile for $31,250 at the beginning of last year and incurred the following operating costs:Depreciation ($31,250+ 5 years)InsuranceGarage rentAutomobile tax and licenseVariable operating costThe variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage,the car will have zero resale value in five years, so the annual straight-line depreciation is $6,250. The car is kept in a garage for amonthly fee.$ 6,250$ 3,200$ 1,700$ 850$0.13 per mileRequired:1. Kristen drove the car 24,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round youranswers to 2 decimal places.)Average fixed cost per mileVariable operating cost per mileAverage cost per mile2. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeksduring spring break. What costs above are relevant in this decision? (You may select more than one answer. Single click the box withthe question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the boxfor a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)? Variable operating costs?Depreciation

Cost drivers are the activities or factors that cause costs to be incurred in a business. In…

The variable operating cost consists of gasoline, oil, tires, maintenance, anc the car will have zero resale value in five years, so the annual straight-line c monthly fee. Required: Kristen drove the car 24,000 miles last year. Compute the average cost p- nswers to 2 decimal places.) Average fixed cost per mile

The variable operating cost consists of gasoline, oil, tires, maintenance, anc the car will have zero resale value in five years, so the annual straight-line c monthly fee. Required: Kristen drove the car 24,000 miles last year. Compute the average cost p- nswers to 2 decimal places.) Average fixed cost per mile

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 7EB: Kenzie purchased a new 3-D printer for $450,000. Although this printer is expected to last for ten...

See similar textbooks

Similar questions

Kristen Lu purchased a used automobile for $18,950 at the beginning of last year and incurred the following operating costs: Depreciation ($18,950 ÷ 5 years) Insurance $ 3,790 $1,900 $1,000 Garage rent Automobile tax and license Variable operating cost The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $3,790. The car is kept in a garage for a monthly fee. Required: 1. Kristen drove the car 24,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.) Average fixed cost per mile Variable operating cost per mile Average cost per mile Variable operating costs ? Depreciation 2. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks during spring break. What costs…
es Kristen Lu purchased a used automobile for $33,900 at the beginning of last year and incurred the following operating costs: Depreciation ($33,900 ÷ 5 years) Insurance Garage rent Automobile tax and license Variable operating cost $ 6,780 $ 3,500 $ 1,800 $ 920 $ 0.15 per mile The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $6,780. The car is kept in a garage for a monthly fee. Required: 1. Kristen drove the car 26,000 miles last year. Compute the average cost per mile of owning and operating the car. Note: Round your answers to 2 decimal places. Average fixed cost per mile Variable operating cost per mile Average cost per mile 2. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks during spring break. What costs above are…
GoHigher is planning to purchase a machine that will cost $24,000. It has a six-year life with no salvage value. GoHigher expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. Sales . $90,000 Costs: Manufacturing... Depreciation on machine. Selling and administrative expenses. Income before taxes .. Income tax (50%). $52,000 4,000 30,000 (86.000) $ 4,000 ( 2,000) $ 2,000 Net income. What is GoHigher's payback period for this machine? 24 years. 1 year. 4 years. 12 years. 6 years.
Your cousin has created a business specialised in 3-D printing of metal spare parts for repair shops. For the purchase of one machine, she is considering two different models (project A and B). You are to assist her in making the best choice. Assume an investment horizon of 6 years and a required rate of return of 10%. Assume no corporate or business tax on purchase, income or resale. No computation is required for the depreciation of the machine. After talking to technical professionals and the marketing manager, you have gathered the following information: (*) Operating cash flow margin % is equal to operating cash flow divided by sales. Operating cash flows are equal to sales minus all the recurring cash cost associated to production and sales. Operating cash flow margin % is constant over the period. a) Determine the initial cash outlay for both project A and B. b) Compute operating cash flow and cash flow from assets for both projects over the six (6) years c) Compute the Net…
I like driving small cars and I buy nearly identical ones whenever the old one needs replacing. Typically, I trade in my old car for a new one costing about $20000. Standard maintenance and repair costs are expected to be $500 in the first year (at the end of the year), $750 in the second year, increasing by $500 per year thereafter. Assume interest is 8% and straight line depreciation with a salvage value for the vehicle of $4000 after four years. a. What year would you replace the car? Enter The year number (1,2,3,or 4). EAC EAC EAC Year Salvage Maintenance Capital Maintenance Total XXXXXX XXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXXX XXXXXXXXX $20,000 1 3 4
Your cousin has created a business specialised in 3-D printing of metal spare parts for repair shops. For the purchase of one machine, she is considering two different models (project A and B). You are to assist her in making the best choice. Assume an investment horizon of 6 years and a required rate of return of 10%. Assume no corporate or business tax on purchase, income or resale. No computation is required for the depreciation of the machine. After talking to technical professionals and the marketing manager, you have gathered the following information: (*) Operating cash flow margin % is equal to operating cash flow divided by sales. Operating cash flows are equal to sales minus all the recurring cash cost associated to production and sales. Operating cash flow margin % is constant over the period. Please show your workings carefully. a) Compute the Net Present Value of both project A and B b) Compute the Internal Rate of Return of both projects. Explain your result c) Assume…
Your cousin has created a business specialised in 3-D printing of metal spare parts for repair shops. For the purchase of one machine, she is considering two different models (project A and B). You are to assist her in making the best choice. Assume an investment horizon of 6 years and a required rate of return of 10%. Assume no corporate or business tax on purchase, income or resale. No computation is required for the depreciation of the machine. After talking to technical professionals and the marketing manager, you have gathered the following information: (*) Operating cash flow margin % is equal to operating cash flow divided by sales. Operating cash flows are equal to sales minus all the recurring cash cost associated to production and sales. Operating cash flow margin % is constant over the period. a) Determine the initial cash outlay for both project A and B. b) Compute operating cash flow and cash flow from assets for both projects over the six (6) years c) Compute the Net…
A new car is purchased for $48,000. This cost will be allocatd equally over 6 years. This cost allocation is called depreciation. The book value of the car at any time after its purchase is its original cost minus all depreciation up to that point in time. Create a mathematical model that relates the book value of the car to the time since its purchase. If the variable x represents the number of years of depreciation, what are the possible values of x in this problem? When is the book value of the car under $25,000?(Give exact answer)
GoHigher is planning to purchase a machine that will cost $24,000. It has a six-year life with no salvage value. GoHigher expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. Sales. S90,000 ................. Costs: Manulacturing . Depreciation on machine Selling and adıministrative expenses S52,000 ................ 4,000 30,000 (86.0000) $ 4,000 (2,000) S2,000 Income before taxes.. ******* * Income tax (50%). Net income. .................... What is GoHigher's payback period for this machine? 24 years. 1 year. O 4 years. 12 years. 6 years.
Molly's Mobile Pet Grooming Service recently purchased a cargo van for $28,900. For depreciation purposes, the van is expected to to have a useful life of 120,000 miles and have a trade-in value of $3500. Molly uses the units-of-production method to calculate depreciation.What is the depreciation per mile? Round to the nearest tenth of a cent when necessary.$Molly drives her van 30,000 miles in the first year.What is the book value of the van at the end of the first year?$What is the annual depreciation in a year when the van is driven 42,000 miles?$
6. When you buy a vehicle and take it out of the dealership, it begins to depreciate. Rosa got an offer for a car for $16,069, which has a residual value of $1,981 and a useful life of 6 years. What is the percentage of depreciation of the cost of the car per year? Indicate if you think the offer is convenient for Rosa and explain your answer. A. Identify the data and establish the relationship between them. B. Resolve the relationship by presenting the procedure and answer the question in a complete sentence
Zachary Freight Company owns a truck that cost $36,000. Currently, the truck's book value is $23,000, and its expected remaining useful life is four years. Zachary has the opportunity to purchase for $26,000 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $6,600 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $17,000. Required Calculate the total relevant costs. Should Zachary replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out? Total relevant costs Should Zachary replace or continue the old truck? Keep Old Replace the old truck. Replace With Now