a) ToT Sdn Bhd, operates a delivery services in Johor. The company has determined that...
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a) ToT Sdn Bhd, operates a delivery services in Johor. The company has determined that if a truck is driven 105,000 kilometers during the year, the average operating cost is RM1.14 per kilometer. If a truck is driven only 70,000 kilometers during a year, the average operating cost increases to RM1.34 per kilometer. Required: i) Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. ii) Express the variable and fixed costs in the form Y=a+bx (5 marks) (2 marks) iii) If a truck was driven 80,000 kilometers during a year, what total cost would you expect to be incurred? (2 marks) b) Due to a rapid growth in sales, the management of ALN Bhd decides to create a new position which responsible to coordinate shipments of finished goods from the factory to distribution warehouse located in various district in Sabah. The management is unsure how to classify the annual salary of this new position in its cost records. The production manager says that the salary should be classified as manufacturing cost, but the financial controller says that the salary should be classified as a selling expense. Required: Advise the management on how to classify the salary. (6 marks)
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