Read the case study “Over-land Trucking and Freight: Relevant Costs for Decision Making” and answer the following question:

a. Why might Over-land use an independent operator if the variable cost per mile is higher than if the company had purchased a rig and hired a driver?

b. At what point would management be indifferent between the scenarios? Based on your analysis, would you recommend adding capacity by purchasing an additional rig or by utilizing the services of an independent contractor? Why?