Question

Costing Models

You work for XYZ trucking and your boss has asked you to figure out how much the firm should charge a new customer to make a full Truckload delivery and make a 15% profit. The firm knows that it will find a backhaul customer, so you only need to worry about the cost for the move.

The shipment consist of 400 boxes weighing 100 pounds each, and measuring 4 cubic feet each. The trailers that your company uses can carry 46,000 pounds and have a volume of 3,600 cubic feet.

You calculate that it will take 4 hours to drive from your terminal to the customer’s factory, wait for the truck to be loaded and return to your terminal. The distance between your terminal and your customer’s factory is 35 miles.

Your line haul driver will then take the truck to the consignee and deliver the boxes. The total distance from your terminal to the consignee is 900 miles and will take the driver 30 hours. Once at the consignees it will take 4.5 hours to offload the truck. Then the driver will go to the XYZ trucking terminal in the same city, which is 45 miles away.

What would you recommend to your boss that the price should be set per cwt to complete this move?

(Make sure to show your calculations)

The equipment cost data is as follows:

Equipment Cost Data                                   

Equipment Purchase Price                          

Line-haul tractors     $100,000                   

Trailers           $ 38,000                    53-foot dry van

Depreciation                          

Tractors                                 4 year straight line

Trailers                                  7 year straight line

Interest                                  

Tractors                                  4% APR for 4 years

Trailers                                   4% APR for 7 years

Fuel                             

Per Gallon      $  3.60                        

Line-haul tractors                             6 miles per gallon

Labor Cost                              

Line-haul drivers      $   0.47                       per mile

PUD operation drivers         $ 21.00                       per hour

                         

Miscellaneous                                    

Insurance cost           $  0.056                      per mile

Maintenance cost      $  0.130                      per mile

Billing cost      $   3.00                       per freight bill

Administrative overhead     15%                of total cost

Equipment available for use 365 days, 24 hours per day = 8,760 hours per year.

PLEASE SHOW ALL WORK SO I CAN UNDERSTAND HOW TO DO THIS. THANK YOU SO MUCH FOR THE HELP!

Answer 1