Roger is a student at Tacoma Community College and needs to supplement his income while going to school. Roger buys a new car and decides to be an Uber driver. The hours are flexible and the pay is reasonably good allowing Roger to go the school and work. Roger didn’t drive much during March as he was on spring break. In addition. Roger drove less during May and December because he was studying for final exams. Uber requires Roger to pay a commission of 20 percent on all gross receipts. Roger buys a new Hyundai Elantra SE for $25,000. Roger thinks the car will last four years and will have a residual value of $5,000. Roger plans to depreciate the car using straight-line depreciation. The car will be used 100 % for business. Roger keeps track of his expenses in three categories. Those categories are insurance on the car: fuel costs; and other costs. The other category includes fixing of flat tires, oil changes, speeding tickets, car washes/detailing, cell phone with data, and auto maintenance. Roger ignores federal income taxes as a business expense and self-employment taxes as they are not reported as a business expense on his tax return. You are to ignore these costs in your computations. Roger’s gross receipts for the year were $62, 500 Expenses paid with cash or credit card during the last year are as follows: Auto Insurance $4, 439 Fuel Expense $6, 294 Using the high-low- method determine the portion of “Other” costs that are fixed (rounded to the nearest dollar) and the variable cost per mile (rounded three decimal places). Looking at all costs, what are the total variable cost per mile and the total fixed costs? Include cash and noncash annual expenditures in you analysis. Using the results of #2 above, if Roger drives 55,000 miles next year, w hat is the estimated total costs and average cost per mile?Show transcribed image text Roger is a student at Tacoma Community College and needs to supplement his income while going to school. Roger buys a new car and decides to be an Uber driver. The hours are flexible and the pay is reasonably good allowing Roger to go the school and work. Roger didn’t drive much during March as he was on spring break. In addition. Roger drove less during May and December because he was studying for final exams. Uber requires Roger to pay a commission of 20 percent on all gross receipts. Roger buys a new Hyundai Elantra SE for $25,000. Roger thinks the car will last four years and will have a residual value of $5,000. Roger plans to depreciate the car using straight-line depreciation. The car will be used 100 % for business. Roger keeps track of his expenses in three categories. Those categories are insurance on the car: fuel costs; and other costs. The other category includes fixing of flat tires, oil changes, speeding tickets, car washes/detailing, cell phone with data, and auto maintenance. Roger ignores federal income taxes as a business expense and self-employment taxes as they are not reported as a business expense on his tax return. You are to ignore these costs in your computations. Roger’s gross receipts for the year were $62, 500 Expenses paid with cash or credit card during the last year are as follows: Auto Insurance $4, 439 Fuel Expense $6, 294 Using the high-low- method determine the portion of “Other” costs that are fixed (rounded to the nearest dollar) and the variable cost per mile (rounded three decimal places). Looking at all costs, what are the total variable cost per mile and the total fixed costs? Include cash and noncash annual expenditures in you analysis. Using the results of #2 above, if Roger drives 55,000 miles next year, w hat is the estimated total costs and average cost per mile?
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