In: Economics
Previously, the given statement is
"If the engines are crated so that they can be shipped at the
rate of $3.50 per kilogram with the freight bill
computed only on the actual weight shipped." the answer is
$630 per engine.(please do show solutions how did
it arrived to that answer) Likewise, how about if this is now the
situation (stated below)?
JRT Motors Inc. has been shipping its Suzuki engines in containers
to avoid the necessary crating of the engines.
JRT Motors Inc. will pay freight on container load of 40 tons, regardless of whether or not the container is completely filled with engines.
Record shows that due to engine size, JRT Motors Inc. has shipped only 30 tons per container.
Freight of container cost $3.00 per kilogram.
If the engines are crated so that they can be shipped at the rate of $3.50 per kilogram with the freight bill computed only on the actual weight shipped.
The cost of crating would be $50 per
engine and would increase the shipping weight from 1500 kg to 1520
kg per engine.
a. How much more economical shipping the engine in crates, than
in containers?
b. Should JRT Motors Inc. ship the engines in crates or in
containers?
Please show a clear, complete and step-by-step solutions as well as
essential formulas to be considered.
Actual weight shipped = 1500 kg per engine
Cost of crating = $50 per engine
Crating increase shipping to 1520 kg per engine
Freight of container cost $3.00 per kilogram.
If the engines are crated so that they can be shipped at the rate of $3.50 per kilogram with the freight bill computed only on the actual weight shipped.
a. (1500 - 50 ) - (( 1520 × 3.50 ) - ( 1500 × 3 ))
= 1450 - 820
= $630 per engine
b. JRT Motors Inc. ship the engines in containers because otherwise in crates it has to bear freight and crating charges.