Framiltone : Sep/Dec 26 (Budgeting)

Cos is explained in W2 Q2 budgered cos = 7120 Appendix 2 , Note 1 says this should 2% higher, so an increase of 2% x 7120 = 142.40. Cos now = 7262.40. 50% of this is at the old exchange rate of 1.4. The V$ for this 50% is 50% x 1.4 x 7262.40 =5,083.68 At new exchange rate of 1.5, C$ = 5,083.68/1.5 = 3,389.12 Difference = 3389.12 - 7262.4 x 50% = 242.08 The model answer figure of 242.2 is a rounding error as 6.67 was used instead of 6.6666666%. The total fuel cost includes tax of 60%. Net of tax the fuel cost is Gross cost x 100/160. This increases by 3%. So the adjustment is 3% x 100/160.

Thanks a lot. 100 % clear !