Question
In: Operations Management
Landed cost calculation You have been asked to calculate thelanded cost for two apple producers....
Landed cost calculation You have been asked to calculate the landed cost for two apple producers. Farm A, can produce apples for $25 per bushel. Farm A has a fixed transportation cost of $0.50/unit/mile. Farmer B can produce their apples for $20/bushel but has higher transportation cost of $0.60/unit/mile. For this example, there are no other cost. Knowing this information calculate the following: What is the landed cost per unit for each of the products if their main market is 40 miles away
Farmer A =
Farmer B =
Solutions
Expert Solution
A can produce for $25 per bushel
The transportation cost is $0.5/unit/mile.
The market is 40 miles away.
Hence the total transportation cost = 40*0.5 = $20 per bushel
Hence total cost of farmer A = $25+$20 = $45 per bushel
B can produce for $20 per bushel
The transportation cost is $0.6/unit/mile.
The market is 40 miles away.
Hence the total transportation cost = 40*0.6 = $24 per bushel
Hence total cost of farmer B = $20+$24 = $44 per bushel
keosha answered 2 years agoRelated Solutions
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