Question
Swift Delivery Services offers expedited delivery services. Each delivery takes approximately 3 hours. The company anticipates 5,000 deliveries annually. They have invested $2,000,000 in their
Swift Delivery Services offers expedited delivery services. Each delivery takes approximately 3 hours. The company anticipates 5,000 deliveries annually. They have invested $2,000,000 in their facilities and aim for an ROI of 20%. The budgeted costs for the coming year are shown below:
| Cost Item | Per Delivery ($) | Total ($) |
|---|---|---|
| Direct Materials (Fuel, etc.) | 15 | 75,000 |
| Direct Labor (Drivers) | 50 | 250,000 |
| Variable Overhead | 20 | 100,000 |
| Fixed Overhead | - | 400,000 |
| Variable Selling & Admin Expenses | 10 | 50,000 |
| Fixed Selling & Admin Expenses | - | 100,000 |
Required:
- Determine the total cost per delivery.
- Calculate the desired ROI per delivery.
- Compute the target price per delivery.
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Financial Accounting
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
2nd Edition
0078110823, 9780078110825
