We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is

Question:

We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is driven 105,000 kilometres during a year, the average operating cost is 11.4 cents ($0.114) per kilometer. If a truck is driven only 70,000 kilometres during a year, the average operating cost increases to 13.4 cents ($0. 134) per kilometer.


Required:

1. Using the high- low method, estimate the variable and fixed cost elements of the annual cost of truck operation.

2. Express the variable and fixed costs in the form Y = a + bX.

3. If a truck was driven 80,000 kilometers during a year, what total cost would you expect to be incurred?

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Related Book For  book-img-for-question

Managerial Accounting

ISBN: 9781259275814

11th Canadian Edition

Authors: Ray H Garrison, Alan Webb, Theresa Libby

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