Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pack-and-G0, a new competitor to FedEx and UPS, does intra-city package deliveries in seven majo metropolitan areas. The performance of Pack-and-Go is measured by management

image text in transcribed

Pack-and-G0, a new competitor to FedEx and UPS, does intra-city package deliveries in seven majo metropolitan areas. The performance of Pack-and-Go is measured by management as: (1) delivery time (relative to budgeted delivery time), (2) on-time delivery rates (defined as agreed-upon delivery date/time plus or minus a specified cushion), and (3) percentage of lost or damaged deliveries. In response to competitive pressures, Pack-and-Go is evaluating an investment in new technology that would improve customer service and delivery quality, particularly in terms of items (2) and (3) above. The cost of the new technology, for each of the seven metropolitan areas serviced by Pack-and-Go, is expected to be $80,000 You have gathered the following information regarding delivery performance under both existing operations and after implementing the new technology Decision Alternative After Implementing New Technology Item On-time delivery rate Variable cost per package lost or damaged Allocated fixed cost per package lost or damaged Annual no. of packages lost or damaged Current System 80% 95% S30 $10 S30 $10 Based on a recent marketing study commissioned by Pack-and-Go, the company estimates that each percentage point increase in the on-time performance rate would lead to an annual revenue increase of $10,000. The average contribution margin ratio for packages delivered by Pack-and-Go is estimated as 40% Required: 1. From a financial perspective, calculate the net financial benefit per year Net financial benefit per vear 2. Based on the data collected by Pack-and-Go, the company is fairly confident about the reduction in costs associated with lost or damaged packages. However, because of uncertainties in terms of pricing in the markets in which Pack-and-Go operates, it is less sure about the predicted increase in revenues associated with the implementation of the new technology. What is the breakeven increase in annual revenue that would justify the investment in the new technology

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Frank Woods Business Accounting

Authors: Frank Wood, Alan Sangster

9th Edition

0273655523, 9780273655527

More Books

Students also viewed these Accounting questions

Question

Write a Python program to check an input number is prime or not.

Answered: 1 week ago

Question

=+ Does it speak to you in a personal way? Does it solve a problem?

Answered: 1 week ago

Question

=+Part 4 Write one unifying slogan that could work here and abroad.

Answered: 1 week ago