Question

Edith Engineer travels from city to city to conduct her business. Every other year she buys a used car for about $12,000. The dealer allows about $8000 as a trade-in allowance, with the result that the saleswoman spends $4000 every other year for a car. Edith keeps accurate records, which show that all other expenses for her car amount to $0.223 per mile for each mile she drives. Edith's employer has two plans by which salespeople are reimbursed for their car. Method
A. She will receive all of her operating expenses, and in addition will receive $2000 each year for the decline in value of the automobile. Method
B. She will receive $0.32 per mile but no operating expenses and no depreciation allowance. If Edith travels 18,000 miles per year, which method of computation gives her the larger reimbursement

Answer 1

Answer:

Answer:

Method A

Explanation:

According to the scenario, computation of the given data are as follow:-

Method A - Actual expenses

Total Reimbursement Amount is

= Car Decline Value + Total Miles of Travel × Per Mile Expenses

= $2,000 + 18,000 miles × $0.223 per mile

= $2,000 + $4,014

= $6,014

Method B - standard Mileage Rate

Total Reimbursement Amount is

= Total Miles of Travel × Per Mile Receive Amount

=18,000 miles × $0.32 per mile

= $5,760

According to the analysis, Plan (A) gives her the larger reimbursement.

Explanation:

Answer 2

Answer:

Method A

Explanation:

According to the scenario, computation of the given data are as follow:-

Method A - Actual expenses

Total Reimbursement Amount is

= Car Decline Value + Total Miles of Travel × Per Mile Expenses

= $2,000 + 18,000 miles × $0.223 per mile

= $2,000 + $4,014

= $6,014

Method B - standard Mileage Rate

Total Reimbursement Amount is

= Total Miles of Travel × Per Mile Receive Amount

=18,000 miles × $0.32 per mile

= $5,760

According to the analysis, Plan (A) gives her the larger reimbursement.