Exercise 12-14 ldentification of Relevant Costs (LO12-1 Kristen Lu purchased a u

Question

Exercise 12-14 ldentification of Relevant Costs (LO12-1 Kristen Lu purchased a used automobile for $25,100 at the beginning of last year and incurred the following operating costs Depreciation ($25,100 - 5 years) Insurance Garage rent Automobile tax and license Variable operating cost $5,020 $ 2,600 $ 1,300 $ 680 $ 0.13 per mile The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage the car will have zero resale value in five years, so the annual straight-line depreciation is $5,020. The car is kept in a garage for a monthly fee Required: 1. Kristen drove the car 24,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.) Average fixed cost per mile Variable operating cost per mile Average cost per mile 0.00

Explanation / Answer

Option C is correct $520000 As the Adjusted taxable income is $320000+200000 $520,000 If any doubt please comment Ans 1 Calculation of Average Fixed cost Depreciation $5,020 Insurance 2600 Garage rent 1300 Automobile tax and license 680 Total fixed cost T $9,600 No. of miles drove N 24000 Average fixed cost T/N $0.40 ans Average Fixed cost per mile $0.40 Variable operating cost per mile $0.13 Average cost per mile $0.53 Dear student I have answere the first question completely.

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