Myer Food in Bowling Green, Kentucky, manufactures and markets snack foods. Mila Giles manages the company's fleet
Question:
• Should she continue to manage the fleet in-house with the five employees reporting to her? To do so, she will have to acquire new fleet-management software to streamline Myer Food's fleet-management process.
• Should she outsource the fleet-management function to Fleet Management Services, a company that specializes in managing fleets of trucks for other companies? Fleet Management Services would take over the maintenance, repair, and scheduling of Myer Food's fleet (but Myer Food would retain ownership). This alternative would require Giles to lay off her five employees. However, her own job would be secure, as she would be Myer Food's liaison with Fleet Management Services.
Assume that Giles' records show the following data concerning Myer Food's fleet:
Book value of Myer Food's trucks, with an estimated five-year life ............. $ 3,800,000
Annual leasing fee for new fleet-management software ....................................... $ 9,000
Annual maintenance of trucks ........................................................................... $ 166,000
Fleet Supervisor Giles' annual salary .................................................................. $ 65,000
Total annual salaries of Myer Food's five other fleet-management employees $ 160,000
Suppose that Fleet Management Services offers to manage Myer Food's fleet for an annual fee of $280,000.
Which alternative will maximize Myer Food's short-term operating income?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
The book value of Myer Foods trucks is irrelevant because it will be the same whether the fleet mana...View the full answer
Answered By
Asim farooq
I have done MS finance and expertise in the field of Accounting, finance, cost accounting, security analysis and portfolio management and management, MS office is at my fingertips, I want my client to take advantage of my practical knowledge. I have been mentoring my client on a freelancer website from last two years, Currently I am working in Telecom company as a financial analyst and before that working as an accountant with Pepsi for one year. I also join a nonprofit organization as a finance assistant to my job duties are making payment to client after tax calculation, I have started my professional career from teaching I was teaching to a master's level student for two years in the evening.
My Expert Service
Financial accounting, Financial management, Cost accounting, Human resource management, Business communication and report writing. Financial accounting : • Journal entries • Financial statements including balance sheet, Profit & Loss account, Cash flow statement • Adjustment entries • Ratio analysis • Accounting concepts • Single entry accounting • Double entry accounting • Bills of exchange • Bank reconciliation statements Cost accounting : • Budgeting • Job order costing • Process costing • Cost of goods sold Financial management : • Capital budgeting • Net Present Value (NPV) • Internal Rate of Return (IRR) • Payback period • Discounted cash flows • Financial analysis • Capital assets pricing model • Simple interest, Compound interest & annuities
65+ Reviews
86+ Question Solved
Related Book For 
Question Posted:
