Question

Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined...

Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 129,000 kilometers during a year, the average operating cost is 13.7 cents per kilometer. If a truck is driven only 86,000 kilometers during a year, the average operating cost increases to 16.8 cents per kilometer.

Required:

1. Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet of trucks.

2. Express the variable and fixed costs in the form Y = a + bX.

3. If a truck were driven 108,000 kilometers during a year, what total operating cost would you expect to be incurred?

Homework Answers

Answer #1

If you have any doubts please comment on the answer.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined...
Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 153,000 kilometers during a year, the average operating cost is 12.5 cents per kilometer. If a truck is driven only 102,000 kilometers during a year, the average operating cost increases to 15.4 cents per kilometer. Required: 1. Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet...
Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined...
Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 153,000 kilometers during a year, the average operating cost is 12.5 cents per kilometer. If a truck is driven only 102,000 kilometers during a year, the average operating cost increases to 15.4 cents per kilometer. Required: 1. Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet...
Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined...
Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 153,000 kilometers during a year, the average operating cost is 12.5 cents per kilometer. If a truck is driven only 102,000 kilometers during a year, the average operating cost increases to 15.4 cents per kilometer. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. (Do not...
Hoi Chong Transport, Ltd. operates a fleet of delivery trucks in Singapore. The company has determined...
Hoi Chong Transport, Ltd. operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 126,000 kilometres during a year, the average operating cost is 14.0 cents per kilometre. If a truck is driven only 84,000 kilometres during a year, the average operating cost increases to 15.9 cents per kilometre. (The Singapore dollar is the currency used in Singapore.) Required: 1. Using the high-low method, estimate the variable and fixed cost elements of...
Exercise 6A-3 Cost Behavior; High-Low Method [LO6-10] Hoi Chong Transport, Ltd., operates a fleet of delivery...
Exercise 6A-3 Cost Behavior; High-Low Method [LO6-10] Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 153,000 kilometers during a year, the average operating cost is 12.5 cents per kilometer. If a truck is driven only 102,000 kilometers during a year, the average operating cost increases to 15.4 cents per kilometer. Required: 1. Using the high-low method, estimate the variable operating cost per kilometer and the annual...
The Jolly Transport Co. operates a fleet of delivery trucks in the Ft Lauderdale area. It...
The Jolly Transport Co. operates a fleet of delivery trucks in the Ft Lauderdale area. It has been determined that if a truck is driven 105,000 kilometers over a one year period the average operating cost is $0.114 per kilometer. If a truck is driven only 70,000 kilometers annually, the operating costs increases to $0.134 per kilometer. Required: In the space alotted below answer the following questions a)    Using the high-low method, estimate the variable and fixed cost elements of...
1. Mauro Products distributes a single product, a woven basket whose selling price is $22 per...
1. Mauro Products distributes a single product, a woven basket whose selling price is $22 per unit and whose variable expense is $19 per unit. The company’s monthly fixed expense is $8,100. Required: 1. Calculate the company’s break-even point in unit sales. 2. Calculate the company’s break-even point in dollar sales. (Do not round intermediate calculations.) 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not...
A company has just invested in a fleet of 12 new delivery trucks. They are identical...
A company has just invested in a fleet of 12 new delivery trucks. They are identical in terms of features, capability, and price. The companies operation involves deliveries to long haul' destinations, and 'short haul' destinations. The company assumes each truck to have a useful life of 5 years. Experience has shown that the 'long haul' trucks typically develop problems, or wear out, twice as fast as the 'short haul' trucks, primarily due to the significantly higher number of miles...
Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from the...
Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from the company’s mine to its two steel mills—the Northern Plant and the Southern Plant. Budgeted costs for the Transport Services Department total $311,100 per year, consisting of $0.18 per ton variable cost and $261,100 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 57% of the Transport Services Department’s capacity and the Southern Plant...
PLEASE USE EXCELUPD United Parcel Delivery (UPD) owns a fleet of 1800 delivery trucks serving the...
PLEASE USE EXCELUPD United Parcel Delivery (UPD) owns a fleet of 1800 delivery trucks serving the metropolitan Chicago area. All trucks are maintained at a central garage. On the average, four trucks a week require a new engine. Engines cost $900 each, and the delivery time is two weeks. There is a fixed order cost of $130, and UPD uses an annual inventory holding cost rate of 30%. For each week a truck is out of service, UPD estimates it...