TSCM $350$ Carrier Management Homework $4$

Using MS Excel $,$MS Word, and the following information:

$1.$ Prepare a fixed$-$variable and over$/$under pricing structure for the three private fleet opportunities listed below.

$2.$ Prepare a pro forma income statement for the three private fleet opportunities listed below.

$3.$ Rank the three opportunities in order of preference.

$$ Variable Costs

$$ Driver Pay: $$0\mathrm{.}40/$mile

$$ Fringe Benefits: $35\%$ of wages

$$ Fuel: $$2\mathrm{.}42/$Gallon and $8$ MPG $($new Freightliner Cascadia$)$

$$ Maintenance: $$0\mathrm{.}15/$mile

$$ Insurance: $$0\mathrm{.}13/$mile

$$ Fixed Costs

$$ Tractor Depreciation: $$45,000/$year$/$tractor

$$ Trailer Depreciation: $$5,800/$year$/$trailer

$$ Legalization$/$Recruiting$/$Administration: $$20,000/$year$/$driver

$$ Tractor Cost: $$135,000$

$$ Trailer Cost: $$29,000$

$$ Company will finance $75\%$ of the capital investment

$$ Interest Rate: $6\%($calculate as simple annual interest$)$

$$ Effective Tax Rate: $38\%$

$$ ROA Hurdle Rate for New Capital Investments: $6\%$

$$ OR Target Rate for Truckload Operations: $88\%$

$$ Weeks per year: $52$

$$ Length of contract: $3$ years

Mutually Exclusive

Fleet Opportunities Fleet Opportunity

A B C

Fleet Summary:

Tractors $5812$

Trailers $102430$

Utilization $($Weekly Miles per Tractor$)2,8002,9002,100$