Question

Overnight package delivery is a multimillion dollar industry that has grown steadily since it began. The four largest package carriers are the U.S. Postal Service (USPS), Federal Express (FedEx), United Parcel Service (UPS), and DHL. Suppose you have a document that must be delivered to each of the cities listed in the table below by the close of business tomorrow. Using each company’s website, determine the price to ship your letter and record the information in the following table.


To answer the following questions, assume that the prices charged by the companies are directly related to the cost of delivery. Remember that process costing averages the total cost across all units (in this case shipment) so that the cost of each unit (shipment) is the same. Job order costing charges different amounts depending on the amount of materials, labor, and overhead needed to fill the order.

Required:
1. Based on their pricing, which of the delivery companies appear(s) to use process costing?
2. For each company that does not appear to use process costing, what factors are likely to impact the cost (and thus pricing) of the overnight delivery service?
3. In this industry, what are the potential advantages and disadvantages of processcosting?


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  • CreatedFebruary 27, 2015
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