Question
For this problem below and the two questions that go along, the answers are already found. I'm just not exactly sure how to get those
For this problem below and the two questions that go along, the answers are already found. I'm just not exactly sure how to get those answers.
Joseph Czerniakow is the owner of a fish market. Sometime ago, Joseph bought a full size van, hired a commercial driver, and started his own transportation business. This new business venture, that Joseph calls Czerniakow Logistics, provides cargo transportation for small and midsized food markets located mainly in the Brooklyn area. Currently, Joseph is charging his customers $0.50 (50 cents) for each mile driven. Joseph estimates that only 80 percent of miles driven can be billed to his clients while the remaining 20 percent are used to relocate his track. However, Joseph feels that the price of his transportation service may be inaccurate. To better price his new service, Joseph asked his assistant, Rachel Hirsh, to record the miles driven each month along with all associated costs. The total fixed cost is $1,067, while the variable cost for driving one mile is $0.37.
Month | MilesDriven | OperatingCost |
January | 16000 | 6700 |
February | 17500 | 7200 |
March | 19200 | 8350 |
April | 17800 | 7300 |
May | 18200 | 7600 |
June | 15100 | 6900 |
July | 14200 | 6200 |
August | 15600 | 7300 |
September | 19000 | 8300 |
October | 19200 | 8400 |
November | 18500 | 7800 |
If Joseph retains his current price policy, what is his breakeven point? How many miles does the Czerniakow Logistics need to bill to its clients per month to breakeven? A) About 1,630
B) About 3,360
C) About 4,630 (ANSWER)
D) About 5,630
Lets assume Rachel was reported to Joseph that 20,000 miles were driven in a particular month. Moreover, lets assume that Joseph retains his current price policy. Based on the data, how much operating income/loss can he expect for that month?
A) $ 721
B) $ 1,020
C) $ 1,620
D) $ 2,620 (ANSWER)
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