Solution-Calculate the annual running costs by classifying

Calculate the annual running costs by classifying the costs

Reference no: EM132903423

Question - Monokuma has a four cars for its sales representatives. The business manager estimates running costs as follows:

The cars were purchased two years ago and the total purchase price is $55,000. The cars have an estimated useful life of six years and can be traded in for $4,000 at the end of their estimated useful life. Monokuma depreciates vehicles on a straight-line basis.

Petrol and oil cost $0.18 per km.

Tyres are replaced after 28,000 kms. Each tyre costs $200 and fitting and balancing charges are $25 per set.

Maintenance costs average $300 per car annually.

AA membership, tax and insurance cost $350 per car annually.

Required - Calculate the annual running costs by classifying the costs in terms of fixed, stepped and variable costs. Assume the cars travel:

(a) 14,000 kms per annum.

(b) 28,000 kms per annum.

Reference no: EM132903423

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Calculate the annual running costs by classifying the costs

Reference no: EM132903423

Reference no: EM132903423

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