Jogi transporters operate in the transport industry. On 1/1/2016, the management acquired a new lorry to meet customer needs and cater for the increase in business volume. Initial costs and maintenance are as follows;

Cost 12,000,000

Scrap value- 2000000

Annual road fee- 1200

Insurance premium per year- 400000

Replacement of tyres after every 25000km- 48000

Replacement of spare parts per service- 8000

Price of fuel per litre- 60

Additional information

Economic life for the lorry-4years

The lorry has 6 tyres each costing 8000

Service is carried out after every 5000km

On average the lorry covers 20km for every litre consumed.

The lorry is projected to cover 100,000km in January, 25000km in February and 50,000km in march 2006.

Required;

Prepare a schedule for the three months showing;

Variable cost per km (2marks)

ii.	Fixed cost per km	(2mark
iii.	Total cost per km	(1mark)

Fixed costs are actually variable cost. With reference to (b) above, explain whether you agree or disagree with the statement (1marks)