Question: need help with part a and b $61 5. INCREMENTAL ANALYSIS capacity (9,000 TEUS). Unit information about its shipping rates and costs are as follows:
$61 5. INCREMENTAL ANALYSIS capacity (9,000 TEUS). Unit information about its shipping rates and costs are as follows: Poto Company operates a 12,000 TEU containership which is currently operating at 75% of Revenue per TEU $480 Variable cost Fixed cost ($3,320,000 per voyage + 9,000) 369 Total costs 430 Profit per TEU $50 The company received a proposal from a new customer to ship 2,000 TEUs for $200 per TEU This is a one-time only shipment and acceptance of this proposal will not affect the company's regular route. The president of Poto Company is reluctant to accept the proposal because he is concerned that the company will lose money on the deal. (a) Prepare a schedule reflecting an incremental analysis of this proposal. Indicate the effect the acceptance of this order might have on the company's profit. (b) If acceptance of the shipment would add 500 miles to the voyage and an extra day in port for a total additional cost of $230,000, should the proposal be accepted? Why or why not
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