Calculate the profit contribution per hundred kilomtres

Reference no: EM132719214

Question - 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.

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.

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

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

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

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: EM132719214

Questions Cloud

Explain the importance of activities in promoting control : The Balcar Company's auditors are developing an audit plan to review the company's systems development procedures. Their audit objectives are to ensure that.

Provide the relevant journal entries to account for the tax : Provide the relevant journal entries to account for the tax effect of each of the following on 30 June 2017, showing your calculations

What client education is needed : What nursing interventions will be included in the plan of care for this client as related to the endocrine disorder? What client education is needed?

Email forensics-windows operating systems forensics : Email is one of the most common methods of communications today. What are some of the ways that email can be investigated and used as evidence?

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

Calculate the amortization of bond issue costs : On January 1, 2016, Knorr Corporation issued $900,000 of 6%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31.

Which purposeful sampling technique was used : Which purposeful sampling technique was used? What was the sample size? How were people selected for interviews or observations?

What is the maximum cca deduction for the office equipment : At the beginning of the current year the UCC of the office equipment class was $50,000. What is the maximum CCA deduction for the office equipment

Implementation of enterprise resource planning systems : There have been more than a few newsworthy failures to succeed relating to the implementation of enterprise resource planning systems (ERP)

User Account

All Pages