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How profitable will one-price be

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Reference no: EM133152016

Question - Activity-Based Costing - One-Price is a new shipping company. Its customers will ship packages of any size and any weight anywhere around the world. To keep it simple, the company has decided to charge a single price to ship any package to any destination.

To determine that price, the company first estimated the costs of shipping all packages (large and small size, light and heavy weight, distant and close destinations). It then determined an average shipping cost per package by dividing the total shipping costs by the total number of packages. The company then added a profit margin to that average shipping cost per package for pricing.

Based on this costing information, how profitable will One-Price be? Explain why.

Reference no: EM133152016

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