Question 2- ABC Bevearge Co. Case You are the Logistic Manager of ABC Beverage Company which uses its own private transportation. The following summarize the fixed and marginal (variable) costs of one truck in your fleet which travels 140,000 miles per year. You have estimated that if a truck travels 70,000 miles more its fixed cost increases by 20%. Would assigning your trucks to additional travel be cost effective? (show all your calculations for fixed and variable cost savings) (20 marks) /mile /mile 8.7 4.8 Fixed Costs Depreciation (Lease) truck, trailer, garage, office Interest and Depreciation interst and depreciation on vehicles, Depreciation and interest on garage, office, equip't Management and Overhead salaries, benefits, workers comp, travel, etc. TOTAL 3.2 1.6 13.6 27.1 $/mile S/HOUR $0.63 0.206 0.092 0.062 Marginal (variable) Costs Veicle-based fuel-oil costs lease/purchase payments Repair/manitenance Fuel Taxes Truck Insurance premium Tires Licenses & oversize permits Tolls Driver-based Driver pay Driver benefit Driver bonus payments TOTAL $33.00 $10.72 $4.79 $3.23 $3.12 $1.56 0.6 0.3 0.024 0.019 $1.25 $0.99 0.441 0.126 0.036 $16.59 $6.56 $1.87 27.1 $1.73 Question 2- ABC Bevearge Co. Case You are the Logistic Manager of ABC Beverage Company which uses its own private transportation. The following summarize the fixed and marginal (variable) costs of one truck in your fleet which travels 140,000 miles per year. You have estimated that if a truck travels 70,000 miles more its fixed cost increases by 20%. Would assigning your trucks to additional travel be cost effective? (show all your calculations for fixed and variable cost savings) (20 marks) /mile /mile 8.7 4.8 Fixed Costs Depreciation (Lease) truck, trailer, garage, office Interest and Depreciation interst and depreciation on vehicles, Depreciation and interest on garage, office, equip't Management and Overhead salaries, benefits, workers comp, travel, etc. TOTAL 3.2 1.6 13.6 27.1 $/mile S/HOUR $0.63 0.206 0.092 0.062 Marginal (variable) Costs Veicle-based fuel-oil costs lease/purchase payments Repair/manitenance Fuel Taxes Truck Insurance premium Tires Licenses & oversize permits Tolls Driver-based Driver pay Driver benefit Driver bonus payments TOTAL $33.00 $10.72 $4.79 $3.23 $3.12 $1.56 0.6 0.3 0.024 0.019 $1.25 $0.99 0.441 0.126 0.036 $16.59 $6.56 $1.87 27.1 $1.73