Hart Company sells and delivers office furniture across Western Canada.

The costs associated with the acquisition and annual operation of a delivery truck are given below:

Insurance$1,750Licences$250Taxes (vehicle)$150Garage rent for parking (per truck)$1,350Depreciation ($30,000 5 years)$6,000Gasoline, oil, tires, and repairs$0.16/km

Required:

1.Assume that Hart Company owns one truck that has been driven 50,000 kilometres during the first year. Compute the average cost per kilometre of owning and operating the truck.(Round your answer to 2 decimal places.)

Average cost per kilometre:

3.Assume that the company decides to use the truck during the second year. Near year-end, an order is received from a customer over 1,000 kilometres away. What costs from the previous list are relevant in a decision between using the truck to make the delivery and having the delivery done commercially?(Round your answer to 2 decimal places.)

Relevant cost per kilometre:

Q2

The following are the selling price, variable costs, and contribution margin for one unit of each of Banner Company's three products: A, B, and C:

ProductABCSelling price$60$90$80Variable costs:Direct materials271440Direct labour123216Variable manufacturing overhead384Total variable cost425460Contribution margin$18$36$20Contribution margin ratio30%40%25%

Due to a strike in the plant of one of its competitors, demand for the company's products far exceeds its capacity to produce. Management is trying to determine which product(s) to concentrate on next week in filling its backlog of orders. The direct labour rate is $8 per hour, and only 3,000 hours of labour time are available each week.

Required:

1.Compute the amount of contribution margin that will be obtained per hour of labour time spent on each product.(Round your intermediate calculations to 1 decimal place.)

A B C

Contribution margin per labour hour:

3.By paying overtime wages, more than 3,000 hours of direct labour time can be made available next week. Up to how much should the company be willing to pay per hour in overtime wages as long as there is unfilled demand for the three products?(Do not round intermediate calculations.)

Maximum amount: