Question

In: Accounting

A transport company is studying the total cost of operations. It is assumed that the costs...

A transport company is studying the total cost of operations. It is assumed that the costs are driven mainly by the kilometres covered. Data for the past four months is shown here:

Month Kilometres Total Cost ($)
January 8,000 144,000
February 5,000 120,000
March 7,000 141,000
April 9,000 195,000

a) What is the relevant range for the company operations?

b) Using the high-low method, estimate the company's variable cost per kilometre

Solutions

Expert Solution

Ans a) The relevant range is $120000 to 195000

ekkarill92 answered 8 months ago
Next > < Previous

Related Solutions

Fixed costs are assumed to be $500,000 per year. The company estimates the variable cost per...
Fixed costs are assumed to be $500,000 per year. The company estimates the variable cost per unit (v) to be $75 and expects to sell each unit for $425. There are no taxes and the required rate of return is 22% per year. Suppose that sales are currently estimated to be 5000 units per month. What is the degree of operating leverage?   (Round to 1 decimal place, ie 2.3) Using your answer from above, estimate what the new monthly operating...
A Company manufactures a product A. The company estimates the cost function for the total costs.
A Company manufactures a product A.  The company estimates the cost function for the total costs. The cost driver is number of units.  The following  informations were collected: Month                     Units                                               Total CostsJanuary                     3,560                                             $242,400February                   3,800                                             $252,000March                       4,000                                             $260,000April                         3,600                                             $244,000May                          3,200                                             $228,000June                          3,040                                             $221,600 Compute a cost function using the high-low method.
What is a transfer cost and how is it different than transport costs?
What is a transfer cost and how is it different than transport costs?
Illustrate the total cost graph. You must include total costs, variable costs and fixed costs.
Illustrate the total cost graph. You must include total costs, variable costs and fixed costs.
No. of Products Total Variable Costs, $ Total Costs $ Average Fixed Cost $ Average Variable...
No. of Products Total Variable Costs, $ Total Costs $ Average Fixed Cost $ Average Variable Cost $ Average Total Cost $ Marginal Cost$ 0 0 1 12 2 20 3 24 4 27 5 40 6 65 7 98 Assume that the fixed cost is $80, calculate the above costs in the table and explain the difference between average total costs and marginal costs. In a graph illustrate the Average Total Cost and Marginal Cost Curves, explain their relationship....
What costs are included in determining the total cost of an asset? Why would a company...
What costs are included in determining the total cost of an asset? Why would a company include more than just the purchase price of an asset? Some argue that companies depreciate assets because they lose value. From a financial accounting perspective, is this true? Why or why not?
What costs are included in determining the total cost of an asset? Why would a company...
What costs are included in determining the total cost of an asset? Why would a company include more than just the purchase price of an asset? Some argue that companies depreciate assets because they lose value. From a financial accounting perspective, is this true? Why or why not?
Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost Fixed Costs ATC Average Fixed Costs Average...
Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost Fixed Costs ATC Average Fixed Costs Average Variable Costs 0 0 - 10 - 10 - - - 1 8 24 14 24 2 16 34 10 17 3 24 42 8 14 4 32 49 7 12.25 5 40 57 8 11.4 6 48 67 10 11.17 7 56 81 14 11.57 8 64 99 18 12.38 9 72 123 24 13.67 1b. At a price of $14, what is...
From the following information on costs of production, calculate Total Fixed Cost, Total Variable Cost, Average...
From the following information on costs of production, calculate Total Fixed Cost, Total Variable Cost, Average Variable Cost, and Marginal Cost. I also need to graph the total cost curves as well as the average and marginal cost curves. TC = TFC + TVC so for Q=1 TC=30, assume TFC=20 so TVC=10 (20+10=30); continue with logic about FC, it is independent of output, so it would be an incremental 20 with each additional level of output, TVC for each Q...
assume a company incurs 100,000 for total variable costs and 150000 for total fixed costs to...
assume a company incurs 100,000 for total variable costs and 150000 for total fixed costs to produce 10000 units. what would the total cost be to produce 12000 units?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT