Preston Concrete is a major supplier of concrete to residentialand commercial builders in the Pacific Northwest. The company\'sgeneral pricing policy is to set prices at $119 per cubic yard.Deliveries for 2020 were 420,000 cubic yards, and total costswere:

Material costs	$24,612,000
Yard operation costs	$5,460,000
Administrative costs	$1,134,000

$4,368,000 of the estimated total yard operation costs werevariable, and all of the administrative costs were fixed. Inaddition to the costs above, estimated fixed delivery costs were$180,000 for the year, and estimated variable delivery costs were$7.00 per mile and $36.00 per truck hour. The rate per milereflects the fact that more miles result in more gas, oil, andmaintenance. The rate per truck hour reflects the fact that trucksthat are waiting at a jobsite are kept running (so the concrete mixwon\'t solidify), and drivers continue to get paid during thattime.

Near the end of 2020, Fairview Construction Company asked for adelivery of 5,000 cubic yards of concrete but was unwilling to paythe regular price; it was only willing to pay $90 per cubic yard.Preston estimated that the job would require 6,700 miles of drivingand 280 truck hours. The housing market in the Pacific Northwesthad slowed during recent months, leaving Preston with enoughcapacity to fill the order, but its sales manager was reluctant tocommit to such a reduced price.

REQUIRED

If Preston accepted the offer, what would the profit or loss be(enter a loss as a negative number)?

Answer rating: 100% (QA)

To calculate the profit or loss if Preston Concrete accepted the offer from Fairview Construction Co... View the full answer