Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Kristen Lu purchased a used automobile for $ 1 8 , 9 5 0 at the beginning of last year and incurred the following operating

Kristen Lu purchased a used automobile for $18,950 at the beginning of last year and incurred the following operating costs:
Depreciation ($18,950-: 5 years) $ 3,790
Insurance $ 1,900
Garage rent $ 1,000
Automobile tax and license $ 510
Variable operating cost $ 0.09 per mile
The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $3,790. The car is kept in a garage for a monthly fee.
Required:
Kristen drove the car 24,000 miles last year. Compute the average cost per mile of owning and operating the car.
Note: Round your answers to 2 decimal places.
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?
Note: 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
Depreciationunanswered
Automobile taxunanswered
License costsunanswered
Insurance costs

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions