JRT Motors Inc. has been shipping its Suzuki engines in containers to avoid the necessary crating of
Question:
JRT Motors Inc. has been shipping its Suzuki engines in containers to avoid the necessary crating of the engines. JRT Motors Inc. will pay freight on container load of 40 tons, regardless of whether or not the container is completely filled with engines. Record shows that due to engine size, JRT Motors Inc. has shipped only 30 tons per container. Freight of container cost $3.00 per kilograms.
If the engines are crated so that they can be shipped at the rate of $3.50 per hundred kilograms with the freight bill computed only on the actual weight shipped. The cost of crating would be $50 per engine and would increase the shipping weight from 1500 kg to 1520 kg per engine. How much more economical shipping the engine in crates than in containers? Should JRT Motors Inc. ship the engines in crates or in containers?
Please show a clear, complete and step-by-step solutions as well as essential formulas to be considered.
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield