. In connection with surfacing a new highway, acontractor has a choice of two sites on which toset up the mixing plant equipment.The contractor estimates that it will cost P51.75per cubic meter per kilometer to haul the asphaltpaving material from the mixing plant to the jobsite.If site B is selected, there will be an addedcharge of P600 per day for a flagman and it needs 2 flagman.The job requires 50,000 cubic meters of mixedasphalt paving material. It is estimated that fourmonths (17 weeks of five working days perweek) will be required for the job. Cost FactorsSite ASite BAverage hauling distance6 km4.3 kmMonthly rental of siteP45,000P225,000Cost to setup andremove equipmentP675,000P1,125,000Hauling expenseP51.75/ Cu.m/kmP51.75 / Cu.m/kma) Compare the two sites in terms of their fixed, variable,and total costs.b) For the selected site, how much profit can be made ifit is paid P362.25 per cubic meter delivered to the jobsite?(solution to a)Fixed CostsSite ASite BMonthly rental of siteCost to setup and removeequipmentFlagman wageTotal Fixed CostsVariable CostsSite ASite BHauling expenseTotal CostsSite ASite BFixed + VariableWhat site is better?Sol'n to bREVENUE = ?PROFIT = ?

Variable costs are expenses that vary in direct proportion to changes in a company's level of…

Answered: In connection with surfacing a new…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

. 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
equipment
Flagman wage
Total Fixed Costs
Variable Costs
Site A
Site B
Hauling expense
Total Costs
Site A
Site B
Fixed + Variable
What site is better?
Sol'n to b
REVENUE = ?
PROFIT = ?

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