Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Arlington Town uses an Internal Service Fund to account for its motor pool activities. Based on the following information, calculate the price per trip that

Arlington Town uses an Internal Service Fund to account for its motor pool activities. Based on the following information, calculate the price per trip that the Motor Pool Internal Service Fund needs to charge users during calendar year 2018 to break even:

Automobiles:

The Motor Pool uses three 6-passenger vans, each costing $45,000 and each estimated to have a 5-year life when they were acquired in 2017.

Driver salaries:

The Motor Pool has a driver-administrator, who earns $45,000 a year, and a driver, who earns $35,000. The town uses a rate of 40 percent (to cover benefits, including pensions) for planning purposes.

Insurance:

In 2017, the town purchased a 2-year automobile accident policy at a cost of $6,000.

Fuel and maintenance costs:

Based on experience, the driver-administrator estimates that total fuel and maintenance costs for the year will be $8,000.

Billing units:

To simplify its record keeping, the Motor Pool charges a fixed price per trip. Arlingtons budget office estimates it will provide 750 trips to the towns departments in 2018.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Hotel Operations Simulation And Auditing Manual

Authors: Gail E. Sammons, Cihan Cobanoglu

1st Edition

0131704613, 978-0131704619

More Books

Students also viewed these Accounting questions

Question

What methods can be used for choosing teacher representation?

Answered: 1 week ago