In connection with surfacing a new highway, a contractor has a choice of two sites on which to set up the mixing plant equipment. The contractor estimates that it will cost P51.75 per cubic meter per kilometer to haul the asphalt paving material from the mixing plant to the job site. If site B is selected, there will be an added charge of P600 per day for a flagman and it needs 2 flagman. The job requires 50,000 cubic meters of mixed asphalt paving material. It is estimated that four months (17 weeks of five working days per week) will be required for the job. Cost Factors Site A Site B Average hauling distance 6 km 4.3 km Monthly rental of site P45,000 P225,000 Cost to setup and remove equipment P675,000 P1,125,000 Hauling expense P51.75/ Cu.m/km P51.75/ Cu.m/km a) Compare the two sites in terms of their fixed, variable, and total costs. b) For the selected site, how much profit can be made if it is paid P362.25 per cubic meter delivered to the job site? (solution to a) Fixed Costs Site A Site B Monthly rental of site Cost to setup and remove еquipment Flagman wage Total Fixed Costs Variable Costs Hauling expense Site A Site B Total Costs Fixed + Variable Site A Site B What site is better? Sol'n to b REVENUE = ? PROFIT = ?
In connection with surfacing a new highway, a contractor has a choice of two sites on which to set up the mixing plant equipment. The contractor estimates that it will cost P51.75 per cubic meter per kilometer to haul the asphalt paving material from the mixing plant to the job site. If site B is selected, there will be an added charge of P600 per day for a flagman and it needs 2 flagman. The job requires 50,000 cubic meters of mixed asphalt paving material. It is estimated that four months (17 weeks of five working days per week) will be required for the job. Cost Factors Site A Site B Average hauling distance 6 km 4.3 km Monthly rental of site P45,000 P225,000 Cost to setup and remove equipment P675,000 P1,125,000 Hauling expense P51.75/ Cu.m/km P51.75/ Cu.m/km a) Compare the two sites in terms of their fixed, variable, and total costs. b) For the selected site, how much profit can be made if it is paid P362.25 per cubic meter delivered to the job site? (solution to a) Fixed Costs Site A Site B Monthly rental of site Cost to setup and remove еquipment Flagman wage Total Fixed Costs Variable Costs Hauling expense Site A Site B Total Costs Fixed + Variable Site A Site B What site is better? Sol'n to b REVENUE = ? PROFIT = ?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:In connection with surfacing a new highway, a contractor has a choice of two
sites on which to set up the mixing plant equipment. The contractor estimates
that it will cost P51.75 per cubic meter per kilometer to haul the asphalt paving
material from the mixing plant to the job site. If site B is selected, there will be
an added charge of P600 per day for a flagman and it needs 2 flagman. The job
requires 50,000 cubic meters of mixed asphalt paving material. It is estimated
that four months (17 weeks of five working days per week) will be required for
the job.
Cost Factors
Site A
Site B
Average hauling distance
6 km
4.3 km
Monthly rental of site
P45,000
P225,000
Cost to setup and
remove equipment
P675,000
P1,125,000
Hauling expense
P51.75/ Cu.m/km
P51.75/ Cu.m/km
a) Compare the two sites in terms of their fixed, variable,
and total costs.
b) For the selected site, how much profit can be made if
it is paid P362.25 per cubic meter delivered to the job
site?
(solution to a)
Fixed Costs
Site A
Site B
Monthly rental of site
Cost to setup and remove
еquipment
Flagman wage
Total Fixed Costs
Variable Costs
Hauling expense
Site A
Site B
Total Costs
Fixed + Variable
Site A
Site B
What site is better?
Sol'n to b
REVENUE = ?
PROFIT = ?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education