Question

someone please help me

points Hol Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 111,000 kilometers during a year, the average operating cost is 122 cents per kilometer. If a truck is driven only 74,000 kilometers during a year, the average operating cost increases to 14.1 cents per kilometer. Required: 1. Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet of trucks. 2. Express the variable and fixed costs in the form Y = a + bx 3. If a truck were driven 92,500 kilometers during a year, what total operating cost would you expect to be incurred? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the feet of trucks. (Do not round your intermediate calculations. Round the variable cost per kilometer to 3 decimal places.) Variable $ 8.100 cost Faed cost $ 4,500 per year

Answer 1

Answer

Variable cost per hour = $ 8.294

Fixed Cost = $ 429,611

Calculations:

	Lowest range	Highest range
Cost	$   1,043,400	$   1,342,000
KM	74,000	110,000

As per High Low Method,

Variable cost per hour = Change in costs / change in hours

Variable cost per hour = ($1,342,000-$1,043,400)/(110,000-74,000)

Variable cost per hour = $ 298,600/36,000

Variable cost per hour = $ 8.294

Fixed Cost = Total Cost - Variable Cost

Fixed Cost = Total Cost - (Variable Cost per hour * hours)

Fixed Cost = $ 1342000-($8.294*110,000)

Fixed Cost = $ 429,611

Answer 2

Y = $ 429611 + $ 8.294 * X

Answer 3

Y = $ 429,611 + $ 8.294 * X

Y = $ 429,611 + $ 8.294 * 92,500

= $ 1,196,806

In case of any doubt, please comment.