Mandalorian Manufacturing uses a local carrier to transport its material to their main factory twice a week. The local carrier charges 700 per trip. The company is considering operating its own transport service and asks you to prepare a cost statement which would allow management to consider whether to run its own transport service or to continue to use the services of the local carrier. You are provided with the following information: The vehicle would cost 80,000 and would have a life of 10 years at the end of which it would have a trade in value of 5,000. Estimated annual mileage would be 104,000 miles. Wages of the driver would be 45,000 including holiday pay and overtime. The vehicle would require to be serviced every 20,000 miles at a cost of 450 per service. * Subsistence of 50 per trip is to be paid to the driver for each trip. Tyres need to be replaced every 30,000 miles at a cost of 1,250 per set. Licence and insurance would be 2,700. Fuel cost will be 1.80 per litre and the van will travel 25 miles per litre. You are required to: a) Calculate the annual running cost of the service. b) Calculate the cost per trip. c) Advise management as to whether it should start operating its own delivery service or stay with the current local carrier.