Instruction: This practice quiz is designed to help you prepare the first quiz. You are expected to submit multiple times before the deadline, so you can get the full credit. The question is based on our class discussion. Do note that by trying on your own, you will have much more confidence than just listening to me or taking note in class. Example 2-1. The demand: 50,000 yd of mixed-asphalt-paving material during four months (17 weeks of 5 days/week) Cost Factor Site A Site B Average hauling distance 4 miles 3 miles Monthly rental of the site $2,000 $7,000 Cost to set up and remove $15,000 $50,000 equipment Hauling expense $2.75/yd3-mile $2.75/yd3-mile Flagperson Not required $150/dayInstruction: This practice quiz is designed to help you prepare the first quiz. You are expected to submit multiple times before the deadline, so you can get the full credit. The question is based on our class discussion. Do note that by trying on your own, you will have much more confidence than just listening to me or taking note in class. Example 2-1. The demand: 50,000 yd of mixed-asphalt-paving material during four months (17 weeks of 5 days/week) Cost Factor Site A Site B Average hauling distance 4 miles 3 miles Monthly rental of the site $2,000 $7,000 Cost to set up and remove $15,000 $50,000 equipment Hauling expense $2.75/yd3-mile $2.75/yd3-mile Flagperson Not required $150/dayPart 2. Now we need to find the breakeven point. As we discussed in class, the contractor will spend 4 months to deliver everything. So we are in fact looking for a specific amount of material to be delivered when the contractor's revenue equals the total cost of delivering that amount of material. The textbook states that the contractor will sell the material for $12/yd3. Assuming an amount of material, Y yd', will need to be delivered in order to have a breakeven, then the total cost at that point of time is Fixed cost = $ for site B, which is not going to change due to the amount being delivered. Variable cost = unit produced * unit cost = Y yo3 . ( miles * $ /yd3-mile ) = $ * Y The revenue at that point = unit sold * unit price = Y yd3 * $ /yd3 = $ * Y To have a breakeven, the revenue has to equal to the total cost, so * Y = fixed cost + variable cost = $ + $ * Y So the amount of material to be delivered, Y = yd3