Hollings Company sells office furniture in the Rocky Mountain area. As part of its service, Hollings delivers given below: furniture to customers. The costs associated with the acquisition and annual operation of a delivery truck are Insurance $2,320.00 Licences 362.50 Taxes (vehicle) 217.50 Garage rent for parking (per truck) 1,740.00 Depreciation ($13,050 + 5 years) 2,610.00 Gasoline, oil, tires, and repairs 0.10 per kilometre *Based on obsolescence, rather than on wear and tear. Required: 1. Assume that Hollings Company has purchased one truck and that the truck has been driven 72,500 kilometres during the first year. Compute the average cost per kilometre of owning and operating the truck. (Do not round intermediate calculations. Round your answer to 2 decimal places.) werage cost per kilometre 2. At the beginning of the second year, Hollings Company is unsure whether to use the truck or leave it parked in the garage and have all hauling done commercially. (The province requires the payment of vehicle taxes even if the vehicle is not used.) What costs from the previous list are relevant to 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.) 12 Insurance Licenses 7 Taxes [7 Garage rent 17 Depreciation 17 Variable costs3. Assume that the company decides to use the truck during the second year. Near year-end, an order is received from a customer over 1,450 kilometres away. What costs from the previous list are relevant in a decision between using the truck to make the delivery or having the delivery done commercially? (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.) Insurance Licenses Taxes [7 Garage rent 7 Depreciation 17 Variable costs 4. Occasionally, the company could use two trucks at the same time. For this reason, some thought is being given to purchasing a second truck. The total kilometres driven would be the same as if only one truck were owned. What costs from the previous list are relevant to a decision about whether to purchase the second truck? (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.) Insurance Licenses 7 Taxes 7 Garage rent Depreciation [7] Variable costs
