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The Hart Company sells and delivers office furniture in Sudbury. Here are the costs associated with...

The Hart Company sells and delivers office furniture in Sudbury. Here are the costs associated with the acquisition and operation (on an annual basis) of a delivery truck.

Insurance

  1 750 $

Permit

  250

Registration

  150

Rent of the garage for parking (per truck)

1 350

Amortization (30,000 ÷ 5 years) *

6 000

Gasoline, engine oil

0,16 $ kilometer

* depending on the service life

Work to do :

a) Suppose the Hart Company bought a truck and it drove 50,000 kilometers in the first year. Calculate the average cost per kilometer of owning and operating this truck.

b) At the start of the second year, the company wonders whether it should continue to use the truck or leave it in the garage and entrust all its deliveries to specialist companies. (The government requires payment of license fees for vehicles even if they are not in use.) What costs from the previous list are relevant to this decision? Explain your answer.

c) Suppose the company decides to use the truck in the second year. Towards the end of the year, she receives an order from a customer who lives more than 1,000 kilometers away. Which costs from the previous list are relevant in the decision to use the truck to make the delivery or to entrust this task to a specialized company? Explain your answer.

d) Sometimes the company needs two trucks at the same time. Management is considering the possibility of purchasing a second. The total number of kilometers driven would be the same as for one of these vehicles. Which costs from the previous list are relevant in deciding whether or not to buy this second truck? Explain your answer.

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ekkarill92 answered 1 year ago
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