Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

Kristen Lu purchased a used automobile for $16,750 at the beginning of last year and incurred the following operating costs: Depreciation ($16,750 5 years)

image text in transcribed

Kristen Lu purchased a used automobile for $16,750 at the beginning of last year and incurred the following operating costs: Depreciation ($16,750 5 years) Insurance Garage rent Automobile tax and license Variable operating cost $ 3,350 $ 1,700 $ 900 $ 450 $ 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 $3,350. The car is kept in a garage for a monthly fee. Required: 1. Kristen drove the car 16,000 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.) Variable operating costs ? Depreciation ? Automobile tax ? License costs ? 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

Recommended Textbook for

Cost Accounting Foundations and Evolutions

Authors: Michael R. Kinney, Cecily A. Raiborn

9th edition

978-1111971724

Students also viewed these Accounting questions