A motor carrier is trying to determine its cost to pick up a shipment originating in Hot Springs, AR. The carrier dispatches a truck and trailer from Little Rock to pick up the load in Hot Springs. Little Rock is 50 miles from Hot Springs and the trip takes 1 hour. The driver arrives at the shipper and waits for 2 hours while the trailer is loaded. For this exercise the carrier is only concerned with the cost of driving from the terminal to Hot Springs and picking up the load (i.e., does not care about line-haul and delivery costs). Assume there are 30 days in a month. Use the information provided in the following table to determine how much it cost the carrier to pick up this load from Hot Springs: Equipment Purchase Price Tractor $80,000 (Monthly payment = $1,584) $35,000 (Monthly payment = $406) %3! Trailer %3D Depreciation Tractor Trailer Interest Tractor 5-year straight line 10-year straight line 7% APR for 5 years 7% APR for 10 years $5.00/gallon for diesel and the tractor gets 6.5 mpg Trailer Fuel Labor Cost Driver Miscellaneous $0.40 per mile Insurance cost Maintenance cost Billing cost Depreciation expense - cquipment cost/depreciation years/days in a year/hours in a day Interest expense - monthly payment/days in a month/hours ina day Fuel expense - fuel cost per gallon/cquipment miles per gallon S0.03 per mile SO.15 per mile $1.95 per pick up What is the total depreciation expense for this pick-up? What is the total fuel cost for this pick-up? What is the total cost for this pick-up? How much would the carrier need to charge per mile to break-even on this pick-up?
A motor carrier is trying to determine its cost to pick up a shipment originating in Hot Springs, AR. The carrier dispatches a truck and trailer from Little Rock to pick up the load in Hot Springs. Little Rock is 50 miles from Hot Springs and the trip takes 1 hour. The driver arrives at the shipper and waits for 2 hours while the trailer is loaded. For this exercise the carrier is only concerned with the cost of driving from the terminal to Hot Springs and picking up the load (i.e., does not care about line-haul and delivery costs). Assume there are 30 days in a month. Use the information provided in the following table to determine how much it cost the carrier to pick up this load from Hot Springs: Equipment Purchase Price Tractor $80,000 (Monthly payment = $1,584) $35,000 (Monthly payment = $406) %3! Trailer %3D Depreciation Tractor Trailer Interest Tractor 5-year straight line 10-year straight line 7% APR for 5 years 7% APR for 10 years $5.00/gallon for diesel and the tractor gets 6.5 mpg Trailer Fuel Labor Cost Driver Miscellaneous $0.40 per mile Insurance cost Maintenance cost Billing cost Depreciation expense - cquipment cost/depreciation years/days in a year/hours in a day Interest expense - monthly payment/days in a month/hours ina day Fuel expense - fuel cost per gallon/cquipment miles per gallon S0.03 per mile SO.15 per mile $1.95 per pick up What is the total depreciation expense for this pick-up? What is the total fuel cost for this pick-up? What is the total cost for this pick-up? How much would the carrier need to charge per mile to break-even on this pick-up?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A motor carrier is trying to determine its cost to pick up a shipment originating in Hot Springs, AR. The
carrier dispatches a truck and trailer from Little Rock to pick up the load in Hot Springs. Little Rock is
50 miles from Hot Springs and the trip takes 1 hour. The driver arrives at the shipper and waits for 2
hours while the trailer is loaded. For this exercise the carrier is only concerned with the cost of driving
from the terminal to Hot Springs and picking up the load (i.e., does not care about line-haul and delivery
costs). Assume there are 30 days in a month. Use the information provided in the following table to
determine how much it cost the carrier to pick up this load from Hot Springs:
Equipment Purchase Price
Tractor
$80,000 (Monthly payment = $1,584)
$35,000 (Monthly payment = $406)
%3!
Trailer
%3D
Depreciation
Tractor
5-year straight line
10-ycar straight line
Trailer
Interest
Tractor
7% APR for 5 years
7% APR for 10 years
$5.00/gallon for diesel and the tractor gets 6.5 mpg
Trailer
Fuel
Labor Cost
Driver
Miscellaneous
$0.40 per mile
S0.03 per mile
SO.15 per mile
$1.95 per pick up
Insurance cost
Maintenance cost
Billing cost
Depreciation expense cquipment cost/depreciation years/days in a year/hours in a day
Interest expense - monthly payment/days in a month/hours in a day
Fuel expense fuel cost per gallon/equipment miles per gallon
What is the total depreciation expense for this pick-up?
What is the total fuel cost for this pick-up?
What is the total cost for this pick-up?
How much would the carrier need to charge per mile to break-even on this pick-up?
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