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Posted: September 19th, 2019
Overland Case study, accounting homework help
Question description
After a closer examination of capacity, management believes
an additional rig is required to service the FHP account.
Assume Over-land’s management chooses to invest in one
additional truck and trailer that can serve the needs of FHP
(at least initially). Assume the annual incremental fixed
costs associated with acquiring the additional equipment is
$50,000. Further, FHP would agree to pay $2.20 per mile
(total including FSC and miscellaneous) if Over-land would
sign a five-year contract. What is the annual number of
miles required for Over-land to break even, assuming the
company adds one truck and trailer? What is the expected
annual increase in profitability from the FHP contract? (Use
52 weeks per year in your calculations.)20150503162544case_3_relevant_costs___overland_trucking_and_freight_cs.pdf
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