Q2 Study the following data and use it to answer the questions given. Data Cost of...

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Q2 Study the following data and use it to answer the questions given. Data Cost of motor car Trade-in price after 2 years or 60,000 kilometers is expected to be Maintenance - 6-monthly service costing Spares/replacement parts, per 1,000 kilometers Vehicle licence, per annum Insurance, per annum Tyre replacements after 25,000 kilometers, four tyres each at Petrol, per gallon Average mileage from one gallon is 25 kilometers. a) b) Total fixed cost c) Total cost (Ksh) 55,000 15,000 Required: i. Prepare a schedule to be presented to management showing for the kilometers of 5000, 10,000, 15,000 and 30,000 kilometers per annum: Total variable cost d) Variable cost per mile e) Fixed cost per mile 600 200 800 1,500 375 19 f) Total cost per mile If, in classifying the costs, you consider that some can be treated as either variable or fixed, state the assumption(s) on which your answer is based together with brief supporting reason(s). ii. 'The more Kilometers you travel, the cheaper it becomes.' Comment briefly on this statement. 25 Q2 Study the following data and use it to answer the questions given. Data Cost of motor car Trade-in price after 2 years or 60,000 kilometers is expected to be Maintenance - 6-monthly service costing Spares/replacement parts, per 1,000 kilometers Vehicle licence, per annum Insurance, per annum Tyre replacements after 25,000 kilometers, four tyres each at Petrol, per gallon Average mileage from one gallon is 25 kilometers. a) b) Total fixed cost c) Total cost (Ksh) 55,000 15,000 Required: i. Prepare a schedule to be presented to management showing for the kilometers of 5000, 10,000, 15,000 and 30,000 kilometers per annum: Total variable cost d) Variable cost per mile e) Fixed cost per mile 600 200 800 1,500 375 19 f) Total cost per mile If, in classifying the costs, you consider that some can be treated as either variable or fixed, state the assumption(s) on which your answer is based together with brief supporting reason(s). ii. 'The more Kilometers you travel, the cheaper it becomes.' Comment briefly on this statement. 25

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