Over-land Trucking and Freight: Relevant Costs for Decision Making, assignment help

timer Asked: Oct 9th, 2016
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School: Purdue University

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Question four
#4 - Purchase another truck & trailer
After a closer examination of capacity,
management believes that an additional rig is
required to service the FHP account. Assume Overland's management chooses to invest in one
additional truck and trailer that can serve the
needs of FHP (at least initially). Assume the annual
incremental fixed costs associated with acquiring
the additional equipment is $50,000. Further, FHP
would agree to pay $2.20/mile (incl. FSC and misc.)
if Over-land would sign a 5-year contract. What is
the annual number of miles required for Over-land
to break-even, assuming the ...

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