FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Supplier A ships to a frequent customer located at San
Diego. A typical order is 6,000 pounds. These orders
are delivered via less-than-truckload (LTL) shipping
from the plant warehouse at Boston. LTL shipments
from Boston to SD cost $1,600 for a 6,000-pound
shipment. Company A is planning to establish a
breakbulk facility in LA to serve customers in the
California, including the SD customer. The cost of
breaking bulk in LA is estimated to be $1,500 per
truckload shipment received. A truckload shipment
has capacity for up to 48,000 pounds (8 typical
orders). The truckload carrier charges by the mile. The
distance between SD and LA is 100 miles, The carrier
charges a rate of $2 per mile, including a fuel
surcharge of $0.5 per mile. An LTL shipment of 6,000
pounds from LA to SD is $450. Which option is
better? Should Company A establish the breakbulk
facility? Please show calculations.
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Transcribed Image Text:Supplier A ships to a frequent customer located at San Diego. A typical order is 6,000 pounds. These orders are delivered via less-than-truckload (LTL) shipping from the plant warehouse at Boston. LTL shipments from Boston to SD cost $1,600 for a 6,000-pound shipment. Company A is planning to establish a breakbulk facility in LA to serve customers in the California, including the SD customer. The cost of breaking bulk in LA is estimated to be $1,500 per truckload shipment received. A truckload shipment has capacity for up to 48,000 pounds (8 typical orders). The truckload carrier charges by the mile. The distance between SD and LA is 100 miles, The carrier charges a rate of $2 per mile, including a fuel surcharge of $0.5 per mile. An LTL shipment of 6,000 pounds from LA to SD is $450. Which option is better? Should Company A establish the breakbulk facility? Please show calculations.
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