On the other hand new vehicle would be depreciated by $900 if the same technique were to be followed.
The vehicle would be used, on an average 80 kilometers. The fuel efficiency is 8 kms per litre of petrol. Thus, there is a requirement to use 10 liters petrol. Each litre is costing about $2 and so petrol cost would be $20 per day and for 355 days, it would be $7100. The new vehicle has better fuel efficiency giving 10 kms per litre. It would thus require 8 litres per day and with the same cost of petrol, the yearly requirement would be $5680 (that is, 8 litre * $2 * 355 days).
Cost of maintenance has gone up in the recent time. As the vehicle has been subject to severe wear and tear, the maintenance cost is estimated in the order of 20 percent of the car. That is, $1000 this year. But maintenance cost for the new car would be very low. It would not exceed 2 percent of its actual cost. This would be therefore $180 per year.
Based on the information provided as above, the budget for operating the old vehicle has been mapped below. This has been juxtaposed against the possible cost that will be incurred for operating a new vehicle for similar purpose.
Based on the above consideration, operating old vehicle is costlier than the new one. For instance, the annual cost of running the old patrol car is $8600, whereas that of new car would be $6760. There is a difference of $ 1840.
In one of the company meeting, it was decided to have annual gathering under the pretext of a training program. The participants included middle level manager numbering about 25 from the United States. The department conducted basically a training program involving talk by about eight invited guests, who had to be given mementos. As these experts were drawn from best performers’ list working for our organization, it was decided that no honorarium would be paid. These participants were asked to stay in a hotel for 2 days. Hotel room tariff was $ 400 per day on twin sharing