Puget currently charges $10/mile to cover the variable costs of delivery and inc

Question

Puget currently charges $10/mile to cover the variable costs of delivery and includes the $500,000 annual fixed cost related to delivery in the cost of concrete. Now they are considering using a new cost per mile rate that covers both their fixed and variable costs. Required: Given the planned number of annual delivery miles, 700,000 mi., what rate per mile must they charge to breakeven (no profit markup) on their total delivery costs? (show calculations)    Puget currently charges $10/mile to cover the variable costs of delivery and includes the $500,000 annual fixed cost related to delivery in the cost of concrete. Now they are considering using a new cost per mile rate that covers both their fixed and variable costs. Required: Given the planned number of annual delivery miles, 700,000 mi., what rate per mile must they charge to breakeven (no profit markup) on their total delivery costs? (show calculations)   

Explanation / Answer

Answer is =10.71/mile

variable Cost =$10/mile

Fixed Cost allocated based on planned mile=$500000/700000=.71/mile

Rate Per mile =10+.71

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.