Should the cost be based on truck drivers in the system

Assignment Help Financial Management
Reference no: EM131551453

Catamount Inc. employs one worker to load packages on an outgoing truck. The work shift is an 8 hour day. Trucks arrive at the loading dock at an average of 24 during this 8 hour day. The worker can load a truck in 12 minutes. Truck drivers earn $17 per hour while the employees who load the trucks earn $12/hour. While the trucks are being loaded, the truck drivers must sit and wait with the truck.

a) Should the cost be based on truck drivers in the system or truck drivers in the queue? Explain.

b) What is the hourly cost for this system?

c) Catamount has the enough capital to make one improvement to the system. They can decrease the loading rate from 12 minutes per truck to 10 minutes per truck; OR they can add a second dock with an additional worker (each worker still loads at a rate 12 minutes per truck). If they add an additional dock, trucks will still line up in a single line and go to the first available dock. Perform a cost analysis (ignore capital improvement costs) for both options and explain which option Catamount should take. Provide all relevant cost calculations and explain your answer.

Reference no: EM131551453

Questions Cloud

What are its annual coupon rate and yield to maturity : What are its annual coupon rate and yield to maturity?
What are the tax consequences of ronnie stock mutual fund : What are the tax consequences of Ronnie's stock mutual fund ownership if he is in a 25% marginal tax bracket?
What do banks do to increase the money supply : What do banks do to increase the money supply?
After-tax salvage value if equipment is actually sold : what is its after-tax salvage value if the equipment is actually sold after 3 years for $450,000?
Should the cost be based on truck drivers in the system : Should the cost be based on truck drivers in the system or truck drivers in the queue? Explain.
How many brackets should be ordered when WCU places : how many brackets should be ordered when WCU places an order with their supplier,
Tax consequences of ownership of this stock fund : What are the tax consequences of Rena's ownership of this stock fund? Rena is in a 35% marginal tax bracket.
What is the no-arbitrage prices of today : One year from today for an hour a conversion window will open and A and B may be exchange one for one without cost. What is the no-arbitrage prices of B today?
What is the yield to maturity of the bonds : The bonds have a face value of $1,000, coupon rate of 2 % with coupons paid annually and they mature in 25 years. What is the yield to maturity of the bonds.

Reviews

Write a Review

Financial Management Questions & Answers

  Lower asset turnover ratios are generally indicative

Lower asset turnover ratios are generally indicative of more efficient asset management. Borrowing money causes a corporation's return on net assets to increase because everything else being equal the higher the leverage, the higher return on net ass..

  What is the current price of this preferred stock

The National Bank of Columbia has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly dividend of $1.50 on this stock. What is the current price of this preferred stock given a required rate of return of 8.5 percent? Pri..

  Compute an amortization schedule

Compute an amortization schedule for a $95,000, 10 Year annual amortization loan, paying 8% payments are to be made at the end of the year.

  Identify specific fraud risk present

Identify specific fraud risk present during PwC's audits of the Lipper hedge funds. Explain how Pwc should have responded to the fraud risk factors that you identified.

  Farmers sometimes store their grain and wait to sell

Farmers sometimes store their grain and wait to sell at a later date if they think market prices will increase. If they are accurate in their forecasts, this can be a profitable strategy. Let’s look at an example and determine the best course of acti..

  Evaluate the required monthly mortgage payment

Evaluate the required monthly mortgage payment for Mr. Davidson and construct the 2014~2018 amortization table for Mr. Davidson.

  Calculate intrinsic value and time value of call-put options

Assume that the euro is trading at a spot price of USD/EUR 1.49. Further assume that the premium of an American call (put) option with an exercise price of $1.50 is 1.55 (3.70) cents. Calculate the intrinsic value and the time value of the call and p..

  Rate of return on the investment into new equipment

What is the internal rate of return on the investment into new equipment? 10% interest rate.

  Line of credit to fill temporary cash shortfalls

Which of the following financial ratios/percentages would be the most likely reason for a bank to NOT approve a company’s application for a line of credit to fill temporary cash shortfalls?

  Calculate the outright quotes for one and six months forward

Calculate the outright quotes for one, three and six months forward.- If the treasurer wished to buy Ruritanian doppels three months forward, how much would he or she pay in dollars?

  What is the standard deviation of this stock

A stock had returns of 7 percent, –5 percent, 2 percent, and 10 percent over the past 4 years. What is the standard deviation of this stock for the past four years?

  Discounted cash flow approach-what is its cost of equity

The earnings, dividends, and common stock price of Shelby Inc. are expected to grow at 5% per year in the future. Shelby's common stock sells for $29.50 per share, its last dividend was $1.80, and the company will pay a dividend of $1.89 at the end o..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd