Case Study with questions:1. 10 points Assume Certified coul
Case Study with questions:1. 10 points Assume Certified could service the contract with existing equipment. Use Exhibit 1 toidentify the relevant costs concerning the acceptance of FHP’s request to add two additionalloads per week. Which costs are not relevant? Why?2. 10 points Calculate the contribution per mile and total annual contribution associated withaccepting FHP’s proposal. (Use 52 weeks per year in your calculations.)3. 20 points After a closer examination of capacity, management believes an additional rig isrequired to service the FHP account. Assume Certified’s management chooses to invest in oneadditional truck and trailer that can serve the needs of FHP (at least initially). Assume the annualincremental fixed costs associated with acquiring the additional equipment is $50,000. Further,FHP would agree to pay $2.20 per mile if Certified would sign a five-year contract. What is theannual number of miles required for Certified to break even, assuming the company adds onetruck and trailer? What is the expected annual increase in profitability from the FHP contract?(Use 52 weeks per year in your calculations.)4. 20 points Certified has business relationships with independent contractors, though Alan isreluctant to use them. Another possibility for expanding capacity is to outsource the milesrequested by FHP. One of Certified’s most reliable independent contractors has quoted a rate of$1.65 per mile. As with question 3, assume FHP would agree to pay $2.20 per mile if Certifiedwould sign a five-year contract. Further, assume Certified would incur incremental fixed costs of$20,000 annually. These costs would include insurance, rental trailers, certain permits, salariesand benefits of garage maintenance, and office salaries such as billing. How many annual milesare required for Certified to break even if the miles are outsourced? What is the expectedannual increase in profitability from the FHP contract?5. 40 points Prepare a recommendation to management. Use information from your answers toquestions 1–4 in your analysis. Clearly state and support your recommendation. Be thorough.Consider both quantitative and qualitative factors. Be beefy. Use good form.
Collepals.com Plagiarism Free Papers
Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS
Why Hire Collepals.com writers to do your paper?
Quality- We are experienced and have access to ample research materials.
We write plagiarism Free Content
Confidential- We never share or sell your personal information to third parties.
Support-Chat with us today! We are always waiting to answer all your questions.
