Hoi Chong Transport, Limited, operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven162,000 kilometers during a year, the average operating cost is 13.2 cents per kilometer. If a truck is driven only 108,000 kilometersduring a year, the average operating cost increases to 16.6 cents per kilometer.Required:1. Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated withthe fleet of trucks.2. Express the variable and fixed costs in the form Y = a + bX.3. If a truck were driven 135,000 kilometers during a year, what total operating cost would you expect to be incurred?Complete this question by entering your answers in the tabs below.Required 1Required 2Variable costFixed costRequired 3Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associatedwith the fleet of trucks. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimalplaces.)per kilometerper year

Highlow method considers the highest level and lowest level of activity and compares the total cost…

Answered: Hoi Chong Transport, Limited, operates…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Island Novelties, Incorporated, of Palau makes two products-Hawaiian Fantasy and Tahitian Joy. Each product's selling price, variable expense per unit and annual sales volume are as follows: Hawaiian Fantasy Tahitian Joy Selling price per unit $ 12 $ 120 Variable expense per unit $9 $ 48 Number of units sold annually 36,000 5,400 Fixed expenses total $ 437,000 per year. Required: 1. Assuming the sales mix given above, do the following: a. Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole. b. Compute the company's break - even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety percentage. 2. The company has developed a new product called Samoan Delight that sells for $45 each and that has variable expenses of $27 per unit. If the company can sell 12,000 units of Samoan Delight without incurring any additional fixed expenses: a. Prepare a revised contribution…

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