Exercise 13 14 (Algo) Identification of Relevant Costs LO13 1 Kristen Lu purchased a used automobile for $20,650 at the beginning of last year and incurred the following operating costs Depreciation ($20,650 5 years) $ 4,130 Insurance $ 2,200 Garage rent $ 1,100 Automobile tax and license $ 570 Variable operating cost $ 0 09 per mile 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 $4,130 The car is kept in a garage for a monthly fee Required 1 Kristen drove the car 20,000 miles last year Compute the average cost per mile of owning and operating the car (Round your answers to 2 decimal places ) 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 relevant in this decision (You may select more than one answer Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer Any boxes left with a question mark will be automatically graded as incorrect ) check all that apply Variable operating costs Depreciation Automobile tax License costs Insurance costs $ 4,130 $ 2,200 Exercise 13 14 (Algo) Identification of Relevant Costs LO13 11 Kristen Lu purchased a used automobile for $20 650 at the beginning of last year and incurred the following operating costs Depreciation ($20,658 5 years) Insurance Garage rent $ 1,100 Automobile tax and license $ 570 Variable operating cost $ 0 69 per mile 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 $4,130 The car is kept in a garage for a monthly fee Required 1 Kristen drove the car 20,000 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 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 relevant in this decision (You may select more than one answer Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer Any boxes left with a question mark will be automatically graded as incorrect )

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Exercise 13-14 (Algo) Identification of Relevant Costs [LO13-1] Kristen Lu purchased a used automobile for $20,650 at the beginning of last year and incurred the

Exercise 13-14 (Algo) Identification of Relevant Costs [LO13-1]

Kristen Lu purchased a used automobile for $20,650 at the beginning of last year and incurred the following operating costs:

Depreciation ($20,650 5 years)	$ 4,130
Insurance	$ 2,200
Garage rent	$ 1,100
Automobile tax and license	$ 570
Variable operating cost	$ 0.09	per mile

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 $4,130. The car is kept in a garage for a monthly fee.

Required:

1. Kristen drove the car 20,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.)

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 relevant in this decision? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

check all that apply

Variable operating costs
Depreciation
Automobile tax
License costs
Insurance costs

image text in transcribed

$ 4,130 $ 2,200 Exercise 13-14 (Algo) Identification of Relevant Costs [LO13-11 Kristen Lu purchased a used automobile for $20.650 at the beginning of last year and incurred the following operating costs: Depreciation ($20,658 = 5 years) Insurance Garage rent $ 1,100 Automobile tax and license $ 570 Variable operating cost $ 0.69 per mile 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 $4,130. The car is kept in a garage for a monthly fee. Required: 1. Kristen drove the car 20,000 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 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 relevant in this decision? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)