How much will New Madrid gain if they approach Venus and Venus agrees to implement this "activity-reducing" plan? How much will Venus benefit financially by implementing this plan?
How much will New Madrid gain if they approach Venus and Venus agrees to implement this "activity-reducing" plan? How much will Venus benefit financially by implementing this plan?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:9. New Madrid Chocolate Corporation manufactures bulk chocolate that it sells to Venus Candy
Company. Currently, New Madrid packages and ships their bulk chocolate in 50-pound bars that are
then shipped by truck to Venus. Venus then unpacks the bars, disposes of the packaging, melts the
bars, and works the chocolate into smaller retail products. An astute and environmental conscientious
employee observes that New Madrid could make the chocolate keep it hot or warm and ship it in
heated tankers to Venus. This would save cooling and reheating energy cost, packaging cost and time
associated with these activities. Assume the following cost:
• Cooling cost and time for New Madrid $10,000
• Packaging cost for New Madrid $20,000
Annual transportation cost by truck $50,000 paid by New Madrid
Annual transportation cost by train $40,000 paid by New Madrid
Unpackaging and disposal cost of packaging for Venus $10,000
• Reheating cost and time for Venus $30,000
How much will New Madrid gain if they approach Venus and Venus agrees to implement this
"activity-reducing" plan?
How much will Venus benefit financially by implementing this plan?
10. Keeping the prior example in mind - please discuss the costs that Uber and Lyft currently save by
having independent contractors drive their personal automobiles today. Additionally, please discuss
the cost that will revert (or are created and shift) to Uber and Lyft if they are successful in shifting to
self-driving cars in the future.
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