QUESTION 1 Cost Behaviour; High-Low Method Prompt Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful study by the company's cost analyst has determined that if a truck is driven 120,000 kilometres during a year, the average operating cost is 11.6 cents ($0.116) per kilometre. If a truck is driven only 80,000 kilometres during a year, the average- operating cost increases to 13.6 cents ($0.136) per kilometre. 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 100,000 kilometres during a year, what total cost would you expect to be inourred? Problem 2 Haaki Shop Inc. is a large retailer of surfboards. The company assembled the information shown below for the quarter ended May 31 Amount Total sales revenue Selling price per surfboard Variable selling expense per surfboard Variable administrative expense per surfboard Total fixed seling expense Total fixed administrative expense Merchandise inventory, beginning balance Merchandise inventory, ending balance Merchandise purchases $800,000 400 50 20 150,000 120,000 80,000 100,000 320,000 1. Prepare a traditional income statement for the quarter ended May 31 2. Prepare a contribution format income statement for the quarter ended May 31. 3. What is the contribution toward fixed expenses and profits for each surfboard sold during the quarter? (State this figure in a single dollar amount per surfboard)