Question
1. Identifying relevant cost Labrador Furniture sells and delivers home furniture in Great Valley area. The costs associated with the acquisition and annual operation of
1. Identifying relevant cost Labrador Furniture sells and delivers home furniture in Great Valley area. The costs associated with the acquisition and annual operation of a delivery truck are given below: Insurance $ 3,200 Licenses $ 500 Taxes (Vehicle) $ 300 Garage rent for parking (per truck) $ 2,400 Depreciation ($18.000 : 5 years) $ 3,600 Gasoline, oil, tires, and repairs $ 0.14 per mile Required: a. Assume that Labrador company purchased one truck that has been driven 50.000 miles during the first year. Compute the average cost per mile of owning and operating the truck b. At the beginning of the second year, Labrador Furniture is unsure whether to use the truck or leave it parked in the garage and have all hauling done commercially. What costs from the previous list are relevant to this decision? Explain. c. Occasionally, the company could use two trucks at the same time. For this reason, some thought is being given to purchasing a second truck. The total miles driven would be the same as if only one truck were owned. What costs from the above list are relevant to a decision over whether to purchase the second truk? Explain.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started