Question
Maritime Services Corporation (MSC) will soon enter a very competitive marketplace in which it will have limited influence over the prices that are charged. Management
Maritime Services Corporation (MSC) will soon enter a very competitive marketplace in which it will have limited influence over the prices that are charged. Management and consultants are currently working to fine-tune the companys sole service, which they hope will generate a 9 percent first-year return (profit) on the firms $18,900,000 asset investment. Although the normal return in MSCs industry is 11 percent, executives are willing to accept the lower figure because of various start-up inefficiencies. The following information is available for first-year operations: |
Hours of service to be provided: 28,000 | |||||||||||||||||||||||||
Anticipated variable cost per service hour: $21.80 | |||||||||||||||||||||||||
Anticipated fixed cost: $1,870,000 per year
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