Calculate the profit contribution per hundred kilomtres

Reference no: EM132696937

The cost of converting a car to run on liquefied petroleum gas (LPG) is about K15,000 in the Zambia, towards which a government grant would contribute about K7000. From September 1 2019, LPG will on average cost K7.5 per litre, compared with K 16 for ordinary unleaded petrol. However, LPG cars usually have slightly worse fuel consumption, losing about 13% in terms of Kilometers per Litre.

Questions

Fast-Trak company owns a fleet of 20 cars, which are bought new and are used for 30,000 Kilometres over two years before being sold off. The cars average 30 Kilometres to the Litre on petrol. The conversion to LPG does not affect the price in the secondhand market.

Problem i). Calculate the profit contribution per hundred Kilomtres of LPG compared with unleaded petrol, for one of Fast-Trak's cars.

Problem ii). Calculate the break-even mileage for the cars with the LPG conversion.

Problem iii). Calculate the effect on the profit of Fast-Trak of converting to LPG.

Problem iv). The government wants to encourage the use of LPG to protect the environment by reducing the break-even mileage to 10,000 Kilometres; how large a grant should it offer for the LPG conversion?

Reference no: EM132696937

Questions Cloud

Explain why is integrity a threat in the scenario : Why is integrity a threat in this scenario? You are one of the three partners in a firm of accountants. Five years ago, the firm was appointed

Explain the indirect method of preparing a statement : How should an acquisition or disposal of a subsidiary be shown in the statement of cash flows? Explain the indirect method of preparing a statement of cash flow

What two equal payments : What two equal payments, one in 3 years and one in 4 years would replace these original payments? Assume that money earns 3.50% compounded quarterly.

How will the bond issue be recorded and accounted : The Platt Company owns 100%, How will this bond issue be recorded and accounted for in 2021 on the separate books of Platt and Scott?

Calculate the profit contribution per hundred kilomtres : Liquefied petroleum gas, Calculate the profit contribution per hundred Kilomtres of LPG compared with unleaded petrol, for one of Fast-Trak's cars.

What is the maximum cca deduction for the office equipment : In the current year C, What is the maximum CCA deduction for the office equipment class that C can claim in the current year?

How and list the health care funding methods used in canada : How and List the health care funding methods used in Canada. State the health care funding method used in your jurisdiction and describe the payroll implication

Which is true of tax-free reorganizations : Which is true of tax-free reorganizations? In order to achieve reorganization treatment, the transactions must be pursuant to a written plan of reorganization.

What amount of deferred tax liability should be reported : What amount of deferred tax liability should be reported? Bramble Corp. follows IFRS and began operations in 2020 and reported accounting income

User Account

All Pages