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ACM Transport ships goods from Aqaba to Amman using Vans. The variable cost per shipment is only the vans' fuel cost. Fixed costs are the
ACM Transport ships goods from Aqaba to Amman using Vans. The variable cost per shipment is only the vans' fuel cost. Fixed costs are the van-lease costs (leased on monthly bases), drivers' salary (paid on monthly basis with no over-time), and other administrative costs. The current capacity for vans is to ship up to 900 shipments monthly. The company charges its clients a fixed price of $240 per shipment from Aqaba to Amman. The company provided the following data about shipping costs incurred in the last 6 months and the related shipping costs: Month Number of shipments Shipping Costs January 601 $127740 February $123241 March $130430 April 620 $126676 June 679 $131889 July $125680 587 666 617 Instructions: 1. Using high and low method, calculate: a. The variable cost per shipment, and the monthly fixed costs. b. If the company plans to ship 300 shipments in October, what is the expected total shipping costs for October? 2- Calculate the break-even point in dollar value for the company. 3. Based on the above, and assuming that the company expects that the government will increase the fuel price by 10% from the current price, and that the company cannot increase its shipping price, how many shipments shall the company ship every month to achieve a $100,000 of target profit? Is it possible to achieve this target profit taking into account the above facts? explain in detail 4- Ignoring instruction number 3 above, what the company can do to increase the monthly profits, assuming that the government determines the fuel price. Set a scenario and explain in numbers and as a narrative
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