Question: UVW Logistics is considering adding a new route to its delivery services. The following information is available: Current routes: Fixed costs $80,000, Variable costs $10

UVW Logistics is considering adding a new route to its delivery services. The following information is available:

  • Current routes: Fixed costs $80,000, Variable costs $10 per delivery
  • New route: Fixed costs $30,000, Variable costs $15 per delivery

Requirements:

  1. Calculate the total cost of delivering 5,000 deliveries using both current and new routes.
  2. Determine whether UVW Logistics should add the new route based on total costs.
  3. Discuss the concept of incremental analysis in decision-making for UVW Logistics.
  4. Analyze the qualitative factors that UVW Logistics should consider in its decision.
  5. Evaluate the risk associated with adding the new route at UVW Logistics.

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