Total cost with or without consolidated shipment charge

Reference no: EM131791403

Suppose Jones Company has orders from three customers located in the same market area. One order has a total weight of 3,900 pounds, the second weighs 8,600 pounds, and the third weighs 12,400 pounds. The transportation carrier quotes a freight rate of $25 per hundredweight (or cwt.) for direct shipment to the customer for shipments weighing 1,000 to 4,999 pounds, $23 per cwt. for orders weighing 5,000 to 9,999 pounds, and $21 for shipments weighing between 10,000 and 15,000 pounds. Alternatively, the carrier’s rate for shipments weighing more than 20,000 pounds is $18.00 per cwt. However, if the orders are combined into one consolidated shipment, the carrier will charge $290 for each stop it is required to make.

a. Calculate the total cost with or without consolidated shipment charge.

Total cost using seperate shipments

Total cost using consolidated shipments

b. Should Jones consolidate the three shipments?

Yes or no

Reference no: EM131791403

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