Question: Using MS Excel , MS Word, and the following information: 1 . Prepare a fixed - variable and over / under pricing structure

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: $

0.40 /

mile

Fringe Benefits:

35 %

of wages

Fuel: $

2.42 /

Gallon and

8

MPG

(

new Freightliner Cascadia

)

Maintenance: $

0.15 /

mile

Insurance: $

0.13 /

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

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