n. uveriann nas business reiauonsnlps with moep ennent contractors, tnougn alan 1s reluctant to use them- Another possibility for expanding capacity is to outsource the miles requested by FHP. One of [literland's most reliable independent contractors has quoted a rate of $1.55 per mile. As with question 4. assume FHP would agree to pa}.r $2.20 per mile if Overland would sign a fiveyear contract. Further, assume verland would incur incremental fixed costs of $211,000 annually. These costs would include insurance, rental trailers, certain permits, salaries and benets of garage maintenance. and ofce salaries such as billing. How many annual miles are required for verland to break even if the miles are outsourced? What is the expected annual increase in proi'itabitj.r from the FHP contract? What are your conclusions